A power of attorney is a document appointing someone to make decisions on your behalf or sign documents for you. You need to think carefully about who you give this power to.
There are various types of power of attorney. The most common type is the enduring power of attorney (EPA) which is flexible and will allow the person you have named to continue acting even if you are no longer able to make decisions for yourself. An EPA is an important document in which you name a person (called your attorney) who is to have power to act on your behalf and make decisions for you if you become incapacitated. In some cases, two or more people may be appointed. You are known as the donor, the person who is giving the power of attorney. The person who you appoint to act on your behalf is the attorney. An attorney does not need to be a lawyer but should be someone that you trust to do the right thing for you. You can name two or more attorneys to manage your property, but you need to say if they must all agree on all decisions (act jointly) or if any of them can act alone (severally) or decisions can be made by a majority of the attorneys.
There are two types of EPAs: those for property and those for personal care and welfare. Property means everything that you own, including bank accounts, investments and so on. A personal care and welfare attorney is concerned with questions such as where you are to live and are you being properly cared for.
Life can be uncertain at times. Anyone at any age can have an accident or be hospitalised with a serious illness. Someone needs to make sure the mortgage and other bills are paid. Someone needs to ensure your children and other loved ones are being looked after if they were dependent on you. Someone should check that you are being properly cared for.
If you become incapacitated and have not signed an EPA, then the alternative is to get an order from the Family Court. The judge will not necessarily know who you rely on and who you trust to look after things for you. The judge will be reliant on the information provided to the court and will not know who among your family and friends is most able to be trusted.
Before EPAs were introduced to New Zealand in 1988, it was quite common for people to sign a general power of attorney. However a general power of attorney has no legal effect if the person who gave the general power of attorney loses mental capacity (i.e. is no longer able to make decisions). General powers of attorney are useful for periods of temporary absence overseas or to allow someone to carry out a business transaction for you, butthey do not usually provide a long-term solution.
You can choose how wide your attorney’s powers should be. For instance, it could be a general power to look after all your money or property, or it could be more specific – perhaps appointing someone to manage your bank account and to let out your house while you are overseas.
You can choose more than one attorney. If you do, you need to say whether they must act together (jointly), separately (severally) or jointly and severally.
If you want someone to be able to act for you when you can no longer manage your finances, then you need to arrange an EPA while you are still capable. A general power of attorney cannot be converted into an EPA once you are no longer capable.
An EPA for personal care and welfare only comes into effect if you (the donor) become mentally incapable. The personal care and welfare attorney can only make important decisions if a doctor has signed a certificate to say you are mentally incapable. This is sometimes called “invoking the EPA”. For other personal care and welfare decisions, the attorney must have reasonable grounds for thinking you have become mentally incapable.
With property EPAs, you have a choice. You can decide that the property attorney is to be effective only if you are mentally incapable. In that case, the property attorney may need to ask for a medical certificate before taking action. Alternatively, you can say the EPA is to be effective as soon as you sign it. This can avoid the need for a medical certificate and can useful if you are overseas or temporarily unavailable to deal with your finances.
At any time, you may cancel your EPA provided you are still mentally competent to do so.
You need to think very carefully about naming the right person or people in your EPAs. You are giving them a lot of responsibility. In addition, your attorney or attorneys may be called on to make decisions when you are no longer able to do so and you will be unable to keep an eye on what your attorneys are doing.
Each attorney needs to be someone you can trust to do the right thing. You also need to think about your family dynamics. If you name two family members, both of whom you trust absolutely, but they are unable to work together, then this can be a recipe for disaster. You should talk this through carefully with your lawyer before deciding who to name in your EPA.
These Successor attorneys can step into the role if the attorney who is named first can no longer carry out that role. It is possible to name a professional such as a lawyer or accountant as an attorney. They will normally want the EPA to include a clause allowing them to charge for their time in managing your finances and property.
Although there is no automatic check on how well the attorneys are exercising their powers, the attorneys do have a legal duty to consult you, as far as practicable, and anyone else specified in your EPA.
The Family Court can appoint a property manager or welfare guardian whose authority will override the attorney. The Family Court also has authority to supervise attorneys and give them directions about the steps they may take. However, someone needs to apply to the court for that to happen. You can add conditions in your EPA about who the attorneys are to report to – see “Can I add conditions or give directions?”.
Signing an EPA is an important decision and you need good independent advice before you do so. That is why the law says that your signature must be witnessed by one of a list of approved witnesses (see box below).
It can be helpful if you read through the EPA formand read the notes attached to it. See the section below “more information”.It is usually wise to arrange to see your lawyer and to discuss what you have in mind. Your lawyer will be able to advise what is practical in your circumstances.
It is usually wise to talk to the people who you intend to name as your attorneys. You should check they are willing to act as attorneys and they may want to find out what is involved before agreeing to do so. Your lawyer can help you with completing the EPA form. A lawyer who acts for a named attorney may not be able to witness your signature. It may be necessary for you to see another lawyer or approved witness, possibly someone in the same firm.
Remember that giving someone the ability to deal with your property or welfare means giving them an important power. You should think carefully about the person you plan to give this power to – and how much power you should give them. They can act without consulting you and you are bound by decisions they make on your behalf – so choosing someone you can trust is critical. Your attorney can be called to account for misusing the power and for acting contrary to your directions, but you are still bound by any action they have taken that affects other people.
There are strict rules about who can witness your signature as donor of the EPA. The witness must be independent of the attorney or attorneys.
When you sign the EPA, your signature must be witnessed by a lawyer, a qualified legal executive or an authorised officer or employee of a trustee corporation who is independent of the attorney. That witness must give you an explanation of the effects and implications of the EPA and advice on certain matters. The attorney’s lawyer cannot do this.
There is no restriction on who may witness the attorneys’ signatures, except that the witness cannot be the donor or the witness to the donor’s signature.
These rules are designed to ensure that the donor is not signing away control under an EPA without receiving independent advice from a suitably qualified person.
You can add a number of conditions on your EPA form. You should talk to your lawyer or approved witness about whether these will be practical and realistic. You do not want your attorney to be so hampered by restrictions that they cannot get anything done.
One clause that is often included in EPAs is a direction that the attorney or attorneys must consult with named members of your family. It is important that family are kept fully informed as this can avoid disputes later. You can go further and require the attorney to give reports or statements of account, perhaps annually or more often if you prefer. Again, you want to be careful not to create unnecessary burdens for your attorneys.
Even if you say nothing about this in your EPA, your attorney is still required to consult you, the donor of the EPA, if you are able to be consulted.
When you appoint your attorneys, you will need to be clear about what you want from them. You should discuss it with them and, once they are appointed, you should make sure they know what property you have, where you keep relevant documents and what your wishes would be in certain circumstances. For instance, you may want them to buy birthday or Christmas gifts for family members, or offer support to dependants, or make regular donations to charity. They cannot do any of these things or do any other thing for the benefit of others or themselves unless their authority to do so is clearly set out in the EPA.
An EPA for personal care and welfare only takes effect once you no longer have the capacity to make decisions about your own care and welfare. You can only name one attorney to act at first and your named successor attorneys can only act one at a time, in the order you have named them.
There are also several things attorneys for personal care and welfare cannot do. For example, they cannot make decisions in relation to marriage or civil union or adoption of children, refuse medical treatment intended to save your life or prevent serious damage to your health, or consent to some types of medical treatment such as brain surgery.
No. Your will only takes effect when you die. Your EPA deals with decisions that are taken while you are alive. When you die, the EPA comes to an end and your will takes over.
An advance directive (sometimes called a “living will”) is intended to provide guidance for doctors and your family when decisions need to be taken about medical intervention while you are unable to make decisions for yourself. Doctors and family are often uncertain whether or not to go to extreme measures in order to keep someone alive. An advance directive can be helpful in giving family and doctors an idea of what you would want if you were able to speak for yourself. Your attorney for personal care and welfare should also be consulted at that time. This is quite different from both your will and EPA. It is always a good idea to make sure your family, your attorney/s and your doctor are aware of your views in this respect.
Your lawyer can help you with preparation of an advance directive and also a will.. Your attorney named in your EPA for personal care and welfare may take into account what you say in your advance directive.
Each country has its own laws about powers of attorney. Most English-speaking countries have their own specified form of EPA. So, an EPA made under the laws of another country is unlikely to be recognised in New Zealand. The best advice is to make an EPA in each country where you have property of any value or where you regularly spend an amount of time.
It is also unlikely that a New Zealand EPA would be recognised in other countries. Not all countries have laws allowing EPAs to be used at all. You should check with a lawyer in the country concerned if you think you need an EPA in another country.
In order to sign a valid EPA, the donor must have sufficient capacity to understand the document that is being signed. It is not necessary that the donor should understand every detail of what it is the attorney may have to do. It is enough that the donor understands, in general terms, the nature of an EPA and that the EPA gives the named attorney/s authority to make decisions about property or personal care and welfare.
If there is any doubt about the capacity of the donor, then it is important to obtain a medical certificate from a suitably qualified medical doctor before the EPA is signed. Your lawyer can advise the doctor about the requirements for intellectual capacity in this situation and can prepare a draft certificate for the doctor covering the relevant points.
A person may be unable to sign an EPA due to lack of full intellectual capacity. In that case it may be necessary to apply to the Family Court for appointment of a property manager and/or welfare guardian. The application can be made by any one of a number of people including a relative, a social worker, a medical doctor, a representative of an organisation such as IHC or the manager of the place where the person is being cared for.
A person who you appoint to make decisions on your behalf. This is not necessarily a lawyer.
See mental capacity.
The person who gives the enduring power of attorney i.e. who gives authority to the named attorney/s to act on the donor’s behalf.
The usual abbreviation for Enduring Power of Attorney.
Lack of mental capacity – see mental capacity below.
Where an enduring power of attorney is to take effect only if the donor no longer has mental capacity then the formal step of obtaining a doctor’s certificate may be necessary. This is sometimes informally referred to as “invoking” the enduring power of attorney.
Legal executives work under the supervision of a lawyer. Although not qualified as lawyers, legal executives must go through a course of training and pass several exams. They can witness the signature of the donor of an enduring power of attorney and are able to explain the effect of the enduring power of attorney and how it will work.
The state of mind and level of understanding necessary for someone to be able to sign legal documents such as enduring power of attorneys, wills and contracts etc. They are not legally valid unless the person who signed had the necessary level of mental capacity.
Decisions about personal care and welfare affect your personal well-being, not property or financial matters. There are some things that do not come within the authority of a personal care and welfare attorney (see the box above “enduring power of attorney for personal care and welfare – some things to think about”).
A document which authorises the named attorney to speak for and act on behalf of the person who gave the power of attorney. There are a number of different types of power of attorney. Most common now is the enduring power of attorney. There are also forms of powers of attorney signed by trustees who wish to delegate their role while overseas or physically disabled. (A power of attorney to delegate or hand over the duties of a trustee cannot be an enduring power of attorney.)
The Protection of Personal and Property Rights Act 1988. This is the law which covers enduring power of attorneys. It also covers the appointment of property managers and welfare guardians by the Family Court.
Everything that you own. This includes money, investments, business, furniture, household and personal items, motor vehicles and so on.
A person appointed by the Family Court to manage the property of someone who is no longer able to do so themselves. If there is no attorney acting under an enduring power of attorney for property – or the court has decided the named attorney is not appropriate – then a property manager is appointed.
To cancel so that the document no longer has effect.
People employed by trustee corporations are allowed to witness the donor’s signature on an enduring power of attorney. Effectively there are now only three such organisations doing this work: Public Trust, Perpetual Guardian and Trustees Executors Limited.
A person appointed by the Family Court to manage the personal care and welfare of someone who is no longer able to make such decisions. If there is no attorney acting under an enduring power of attorney for personal care and welfare – or the court has decided the named attorney is not appropriate – then a welfare guardian can be appointed by the court.
The cost of an enduring power of attorney will depend on what clauses or conditions you want to put into your enduring power of attorney. You should talk to your lawyer about the cost at your first interview or meeting.
Lawyers must follow certain standards of professional behaviour as set out in their rules of conduct and client care. When you instruct a lawyer, he or she must provide you with certain information, as outlined in our guide Seeing a lawyer – what can you expect?
This includes informing you up front about the basis on which fees will be charged, and how and when they are to be paid. The fee, which must be fair and reasonable, will take into account the time taken and the lawyer’s skill, specialised knowledge and experience. It may also depend on the importance, urgency and complexity of the matter. There could also be other costs to pay.
You should discuss with your lawyer how you will pay for the work and advise if you don’t want to spend more than a specific amount without the lawyer checking with you.
The booklet Seeing a lawyer – what can you expect? also outlines how you can help control your legal costs and get best value from your lawyer.
The forms for enduring power of attorneys can be found on the Super Seniors website http://www.superseniors.msd.govt.nz/ The enduring power of attorney forms have notes which provide useful information about enduring power of attorneys. There is also further information on the Super Seniors website as well as some video clips explaining enduring power of attorneys.
Lawyers deal with many personal, family, business and property matters and transactions. No one else has the training and experience to advise you on matters relating to the law. If your lawyer can’t help you with a particular matter, he or she will refer you to another specialist.
Seeing a lawyer before a problem gets too big can save you anxiety and money. Lawyers must follow certain standards of professional behaviour as set out in their rules of conduct and client care.
When you instruct a lawyer, he or she must provide you with certain information, as outlined in our guide Seeing a lawyer – what can you expect?
This includes informing you up front about the basis on which fees will be charged, and how and when they are to be paid. The fee, which must be fair and reasonable, will take into account the time taken and the lawyer’s skill, specialised knowledge and experience. It may also depend on the importance, urgency and complexity of the matter.
There could also be other costs to pay, such as court fees. You should discuss with your lawyer how you will pay for the work and advice if you don’t want to spend more than a certain sum without the lawyer checking with you.
A lawyer is required to tell you if you might be entitled to legal aid. The guide Seeing a lawyer – what can you expect? also outlines how you can help control your legal costs and get best value from your lawyer.
Choose your own lawyer for independent advice. You do not have to use the same lawyer as your partner or anyone else involved in the same legal matter. In fact, sometimes you must each get independent legal advice.
Lawyers must have a practising certificate issued by the New Zealand Law Society. You can call the Law Society on (04) 472 7837 (or at one of the offices listed below) or email email@example.com to see if the person you plan to consult holds a current practising certificate. You can also check this on the register accessible through the website www.lawsociety.org.nz.
If you have a concern about a lawyer, you can talk to the Lawyers Complaints Service, phone 0800 261 801.