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The Power that Endures

Powers of attorney (POAs) have been around in our English based legal system from long before the Crusades in the twelfth century. They are still widely used today. Learn about a special type of POA named the Enduring Power.

 Read more articles from Terry here.

Powers of attorney (POAs) have been around in our English based legal system from long before knights setting off to the Crusades in the twelfth century, appointed trusted friends to look after the castle during their absence. Traditional POAs are still used widely today in business.

However, these powers of attorney become void if the person giving them later becomes mentally incompetent.  The theory being that you can hardly act as someone’s attorney if they are mentally incapable of approving your actions or making decisions for themselves.  In 1988, The Protection of Personal and Property Rights Act was passed and created a new type of POA, namely the enduring power.  These EPAs remain (endure) in force even after the appointer becomes mentally incapable and often do not come into force at all unless/until mental incapacity occurs.

Appointing a trusted person, while you are fit and well, to handle your property and personal welfare issues if you later become mentally incapable has been a deservedly popular past time.  Many folk have entered into them. The key advantages are that you chose the person you want and if the worse case scenario happens at a later date, there is no need for your family to become involved in expensive and lengthy court proceedings to have property managers and welfare guardians appointed. Every older person should consider having an EPA. Together with an up to date will they are the basic tools that make sure your affairs are in the best order possible, if the unexpected occurs.

Unfortunately, not all attorneys have been honest or have always acted in the best interests of the mentally incapable person.  Sometimes inappropriate persons have persuaded a mentally fragile person to give them a power of attorney and have then ripped off the appointer. Often other family members have found out too late.  Although most solicitors preparing enduring powers of attorney are alert to issues of undue influence, the situation in the office is one you can normally only take at face value.  The lawyer frequently has no way of telling whether the apparently loving son or daughter, who has bought dear old Mum into the office to sign an enduring power of attorney, is really just after control of Mum’s bank account and has ulterior motives.

Due to widespread concerns at the abuse of enduring powers of attorney, changes to the law to put extra safeguards in place came into force in September 2008.  The law now requires all persons making an EPA to receive truly independent legal advice.  There is a new enduring power of attorney form that has important information attached to it that the solicitor has to explain to the appointer and then certify that the advice has been given and understood.  The attorney is now legally required to consult with other interested persons before making major decisions under the EPA.  An appointor can specify in the EPA which persons their attorney must consult.  

In addition the issue of when an enduring power of attorney comes into force has been clarified by the requirement for a proper medical report to be obtained as to the appointer’s state of mind.  The law presumes everyone has mental competency to handle their own affairs until the contrary is proved. Also, the Family Court has been given expanded powers to enquire into and oversee the use of EPAs.  It should be stated that EPAs entered into at an earlier date are still valid but most of the new rules apply to how they are used.

Unfortunately, these well-meaning amendments to the law have caused some practical difficulties. Due to the rigid requirement for independent legal advice the family solicitor, who may have acted for many years for the family members and has much knowledge of the family circumstances may not be able to act, particularly if the lawyer has previously acted for both the intended appointer and attorney.  However, notwithstanding some of the minor inconveniences of the 2008 amendments to the law, enduring powers of attorney are still the most simple and economic way to future proof yourself against the unexpected.

Disclaimer: This information is of a general and summarised nature only.  It should not be used as a substitute for obtaining personal legal advice.

Terry welcomes feedback and comments and can be contacted through his website www.alibipress.co.nz.