This Part 2 of my 3 part series on the appointment of an Enduring Powers of Attorney, explores matters to consider in Preparing an Enduring Power of Attorney to deal with financial matters. In each jurisdiction it might be called something else, but in NZ such a document is called an Enduring Power of Attorney (Property)(“EPA Property”).
It’s never too early to have an EPA Property prepared. If you have a house, land, or bank account you have financial interests that would need to be attended to if you became mentally incapacitated.
You don’t need to have all your answers lined up before you get advice on an EPA Property but it certainly helps to process the questions in your mind. The following list includes 12 key things to think about:
Do you need to cancel any previous EPA Property appointment?
If you have prepared an EPA Property before, you may need to cancel the appointment. If so, the attorney/s named in the previous power of attorney need to be formally notified in writing by you, your lawyer or your new attorney/s.
Who would you like to be named as your attorney/s – will they agree?
Usually, you can name more than one attorney for financial matters and they can work together. Some jurisdictions limit the number. The more attorneys you choose to work together, the more likely there might be problems. I would recommend you consider keeping the number to a maximum of 2. The person or people you appoint should be financially competent and should be trustworthy. You should talk with that person or people about the role you are asking them to adopt. You will need their full name, address and contact details to complete your instructions.
Do you want to name a successor attorney/s (in case the first named attorney is unable to continue in that role) – will they agree?
I recommend you do nominate a successor attorney if possible as it means the document will survive should there be any reason why your attorney is unable to act (and therefore be more cost effective).
Do you want your EPA Property to become effective immediately or only if you are mentally incapable (with a Doctors certificate certifying incapacity)?
With trusted family members, if you are travelling a lot, or physically incapacitated it might be that you would prefer the EPA Property to come into effect immediately but this gives immediate powers to the attorney and you might prefer to retain sole power so long as you are mentally capable.
If you have named more than one attorney, are they to act jointly (i.e. both must decide) or severally (either can decide) or by majority vote?
My advice on this is very personal to your circumstances. My usual recommendation is joint power for 2 or majority power for more than 2 but, for example, there are cases where one of 2 attorneys may travel a lot and that can cause complications in signing documents.
Should the EPA Property apply to all your property or only to some of your property or to do specified things?
You may wish to limit the EPA Property to dealings with bank accounts only. In most cases, I would recommend broad powers with conditions if there are concerns about the way specific items of property are to be dealt with.
Do you want to impose conditions on any of those powers?
For example, you may want to include special conditions in relation to the sale of the family home or repayment of loans. I recommend preparing your EPA Property at the same time or at least consistently with the terms of your Will so that, for example if you intend to give someone a life interest in your home, that is reflected in your EPA Property conditions.
Who should your attorney consult with and what should they consult about?
The requirement of consultation is a requirement that takes effect before action is undertaken. Examples of persons with whom you may wish your attorney to consult are numerous but obvious ones might include your accountant or lawyer. You will need to provide your adviser with full names, addresses and contact details.
Who should your attorney give information to and what information should they give?
The requirement to provide information takes effect at any time but usually after an action is undertaken. This might involve an attorney providing information to your children or step children for example. By including a provision to disclose information you can help to ensure that your financial circumstances when in the hands of an attorney are more open to disclosure. You will need to provide your adviser with full names, addresses and contact details.
Should the attorney be entitled to profit from acting as attorney e.g. should attorneys be allowed to charge for their time?
All professional attorneys are entitled to charge fees. This can prove costly for your estate but may be necessary. You may also wish to reimburse an Attorney, professional or otherwise for expenses they incur in helping you.
Should your attorney be allowed to apply to the Family Court if for some reason your will is out of date and needs to be changed?
There may be a change in your financial circumstances while the attorney is acting on your behalf that alters the intended effect or validity of your Will. For example, if a property must be sold to meet your expenses but you gave a life interest to it to one of your children in lieu of other bequest.
What other terms and conditions would you like to impose?
There are some things you can do with an EPA Property and some that you can’t. Your legal adviser will be able to take you through your options.
Be wary of one size fits all EPA Property documents. They are like one size fits all Wills. Often ill-fitting and some times not even valid.
In New Zealand you can even expect to pay more for a well prepared EPA Property than for a Will but that is partly because the current form attempts to address many of the problems being faced in this challenging area of law - not least of which is the growth in the number of Elder Abuse cases.
For your documents to be effective in relation to house and land property owned in Australia, you will need to ensure it complies with that state’s requirements and lodge your EPA Property with the relevant land registry (each State and Territory has its own).
There are special considerations if you need your EPA Property to apply to other jurisdictions. Legal advice is essential to ensure you have addressed these.
Preparing a sound EPA Property takes time and consideration and shouldn’t be left until you are in a hurry to get documents done. Make some notes based on the matters raised above, before you go to meet your adviser and you will be well prepared.
Next week I will explore the factors you need to consider in preparing an Enduring Power of Attorney for Health and Welfare (documents which deal with adult guardianship)
Trish likes to do her thinking while she drives - what a perfect combination for a mobile lawyer!
This blog shares those thoughts.
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