Many people spend time preparing a will, but far fewer consider what would happen if they were still alive but unable to make decisions for themselves. An Enduring Power of Attorney (EPA) is an important legal document, which enables you to appoint another person (known as your attorney) to make decisions for you if you become mentally incapable of doing so yourself.

Like a will, an EPA can be updated as your circumstances change. Like insurance, an EPA may never be needed, but it provides important protection should the unexpected occur.

There are two types of EPA. The first relates to property and the second relates to personal care and welfare matters.

Property Attorney

Your property attorney will make decisions relating to financial assets; that is arranging benefits, paying bills, looking after bank accounts, and buying and selling assets (selling the family home to pay for care for example).

You can appoint any number of people to act as a property attorney together or separately, and/or appoint attorneys in succession if you think that is a sensible idea too.

You can also elect whether the EPA for property is to take effect immediately and then endure past the point you have lost capacity, or whether it is to take effect only in the situation where you have lost capacity. An EPA that takes effect immediately can be useful if you are travelling overseas or are physically unable to manage aspects of your affairs yourself. While you retain capacity and you remain able to continue managing your own affairs, your attorney’s role is generally to assist rather than take over.

Personal Care and Welfare

A personal care and welfare attorney will make decisions relating to your health and wellbeing such as your medical treatment, living situation, what level of care you receive, and the like.

You can only appoint one attorney at a time as a personal care and welfare attorney. However, like the EPA for property, you can also appoint attorneys in succession.

The EPA for personal care and welfare will only ever take effect in the situation where you have lost capacity.

What Happens if you do not have an EPA?

If you lose capacity and have not appointed an attorney, your spouse, partner, children, or relatives may discover they are unable to access bank accounts, manage investments, sell property, sign legal documents, or make certain healthcare decisions. This is mostly because financial institutions and government agencies generally require proper legal authority before allowing another person to act on your behalf.

Without an EPA, family members may need to apply to the Court for orders appointing a property manager to manage your financial affairs and/or a welfare guardian to make personal care and welfare decisions. This process can be a stressful, an expensive, and a time-consuming exercise at a time when stress levels are already high.

Things to Think About when Preparing your EPA

The sorts of things you need to think about when preparing your EPAs are:

• Who you would want as your property attorney(s) and any successor attorneys.
• Who you want as your personal care and welfare attorney and any successor attorneys.
• Whether you wish to impose any conditions on your attorney.
• Whether you wish to require your attorneys to consult or provide information to named persons.
• In relation to your property attorney, whether you authorise your attorney to use your property for their own benefit or the benefit of any other person.
• In relation to your property attorney, whether you authorise your attorney to use your property to provide gifts (either to family or charities).



It is also important to be aware your EPA needs to be signed and witnessed in the presence of either a lawyer, registered legal executive, or an authorised officer of a trustee corporation for your EPA to be valid.

Proposed Changes to the Legislation

The Law Commission has recommended replacing the current Protection of Personal and Property Rights Act 1988, which governs EPAs, with an entirely new Act. The Government has accepted the central recommendation to replace the legislation and has indicated substantive reform work is a priority. We do not know precisely what those changes (if any) will look like, but the proposed reforms are summarised as follows:

• More emphasis on your wishes: Under the current framework, attorneys are often guided by what they think is in your best interests. The proposed reforms would place much greater weight on your own wishes, values, beliefs, and preferences. That may mean that rather than simply appointing an attorney, you may be encouraged to leave more detailed guidance to your attorneys. The attorney’s role may be more focussed on carrying out what you would have wanted rather than them deciding what they think is best.
• A new supporter role: The proposed reforms establish the creation of a formal supporter whose job is to help a person understand information, weigh options, and communicate decisions without actually making the decision for that person.
• Capacity may be viewed more flexibly: The reforms recognise capacity is not always all or nothing. The new framework is expected to allow more tailored arrangements rather than completely removing a person’s decision-making authority.
• Greater safeguards against abuse: Future reforms are likely to strengthen oversight and accountability for attorneys by introducing better record-keeping requirements, clearer obligations on attorneys, and potentially a voluntary register of EPAs.

Summary

EPAs are not just documents for the elderly. Accidents, illnesses, and unexpected medical events can affect anyone at any stage of life. By putting an EPA in place, you retain control over who will make decisions for you if you cannot make them yourself and, having EPAs in place, can reduce stress for your family in the event you lose the capacity to make decisions for yourself.

The Law Commission’s review of the legislation is a good reminder of just how important EPAs are, and we are of the view that ensuring they are in place is of the utmost importance. That being said, the current EPA system is effective and still one of the most important estate planning documents available. 

If you are interested in learning more about EPAs and the importance of them or would like to discuss putting them in place, please reach out to one of the team members at Glaister Keegan. We would be happy to assist you.