In this Solution in Action, we explain the value of an Enduring Power of Attorney or Enduring Guardianship, as is it known in some states.
WHAT IS AN EPA?
A General Power of Attorney is a document by which a person (known as the donor of the authority) appoints another person as their representative for a particular purpose (eg. for the two week period the donor is away on travel/family/business reasons). It is revoked if at any time the donor of the power loses legal capacity such as when becoming seriously ill, of unsound mind, or unable to make decisions when you need it most.
An Enduring Power of Attorney does not cease to have effect if the donor becomes incapable of managing his or her own affairs. It continues until the donor either dies or recovers sufficiently to revoke the Power of Attorney.
WHY HAVE AN EPA?
Part of every good financial plan should include a Will and an Enduring Power of Attorney.
A General Power of Attorney often stops working when you need it most, when you become seriously ill.
However, an Enduring Power of Attorney will not be revoked by mental incapacity or illness of the donor.
Couples frequently consider appointing their spouse as their Attorney. Some parties appoint one or more of their children (over 18 years) in the event that their spouse is unable to act whether because of choice or incapacity. Where there is more than one attorney appointed, those persons can either act jointly (ie they must all act together) or severally (ie any one of the attorneys can act).
THE COST OF NOT HAVING AN EPA
The number of people who do not have an Enduring Power of Attorney is surprising. Considerable amounts of money can be locked in the bank, a business can stop overnight and real value of assets can be lost, simply because there is no-one currently able to make decisions. It is almost as important as insurance.
When undertaking your next financial/asset review, be sure to consider an Enduring Power of Attorney. If you do not have one, you should do something about it today.
The importance of an Enduring Power of Attorney cannot be over emphasised.
WHEN DO YOU NEED AN EPA?
There may come a time during your life when you are unable to manage your own affairs,
either through physical, mental or emotional incapacity.
Similarly, during your absence from your business or your home, you may be unable to sign urgent documents.
THE BENEFITS
An Enduring Power of Attorney will give you the confidence that your financial, personal and health affairs can still be managed in your absence or your incapacity, by the appointment of a trusted person who will make the decisions on your behalf.
An Enduring Power of Attorney provides you with the protection of your interests at a time when you are least able to personally supervise those interests.
WHAT POWERS CAN BE GIVEN?
General Purposes: Power to do anything that you can legally do (even whilst you are still capable of doing these things yourself).
A Class of Events: For example, the power to withdraw money to pay all of your bills.
Specific Purpose: For example, the power to purchase or sell a particular property.
LIMITING THE POWERS GIVEN
It is possible to appoint an attorney under an EPA for a particular limited purpose.
For example:
only while you are in hospital
only while you are travelling overseas
only for a particular period (e.g. 12 months)
only for a particular transaction
you can also impose a requirement that there is joint consent of Attorneys before the power can be exercised.
REVOKING THE EPA
An Enduring Power of Attorney may be revoked at any time by you provided you still have capacity (i.e. are of sound mind).
WHY USE A LAWYER?
Individuals who write their own Power of Attorney must ensure that the Power is properly drafted and executed. Without adequate care being taken, the document may be ineffective to achieve your objectives or worse, may confer powers incorrectly (or not as you had wished).
A Power of Attorney needs to be witnessed by a lawyer or qualified professional.
CONTACT
Please contact one of our specialist solicitors to discuss estate planning and trusts in general, or your specific cases.
You are welcome to attend an initial personal consultation, at no charge or obligation, with one of our specialist solicitors, to discuss your individual circumstances.