Law Talks Episode: It’s more than a form – What you might be getting wrong when drafting an Enduring Power of Attorney (EPOA)

Robyn: Good morning and welcome to another edition of law talks here on 4CRB. Today we’re joined by Larisa Kapur an Accredited Aged Care Professional and Senior Associate at Attwood Marshall Lawyers. Thanks for being here today, Larisa.

Larisa: Thanks for having me, Robyn.

Robyn: Today we’re visiting a legal document we’ve spoken about many times on this show, and for good reason. An enduring power of attorney is one of the most powerful documents you can create, yet it’s often underestimated. With so many people turning to DIY options these days, it begs the question is that really enough?

Larisa, what can go wrong if you don’t get the right legal advice, and what risks are you actually exposing yourself to?

Larisa: So, Robyn, it’s a really common misconception and unfortunately a risky one. While these forms are convenient, you know, trying to do them yourself, they’re incredibly generic. They don’t take into account the nuances of your personal financial and family situation.

You might end up giving someone too much power or not enough power. And often key safeguards, like you know, when the attorney begins, or how the power can be used, are left out.

Worst case, if it’s not signed or witnessed correctly the EPOA could be legally invalid. This means that if you lose capacity, someone will still need to apply to the tribunal, which is QCAT or NCAT to be appointed, causing costly and stressful delays.

And as the saying goes, you don’t know what you don’t know. So proper legal advice can uncover risks you hadn’t even thought about.

Robyn: Larisa, what are some of the most common mistakes you see in DIY EPOAs? And how can these mistakes impact someone down the track if they do lose capacity?

Larisa: Yeah. So, there are quite a few and unfortunately one big one is appointing someone you haven’t really thought through. Often a child or partner without checking if they’re actually financially responsible or emotionally capable to do the role.

We’ve seen EPOAs used as tools for financial abuse, so trust is an absolute essential element for this. Other mistakes include failing to say when the power starts or using the wrong witnessing procedure, or not planning for what happens if your attorney can’t act anymore, like if they die or lose capacity themselves.

And in relation to this, if you’ve appointed two children jointly, and if one of them passes away before you, and you don’t stipulate that it’s okay for the other to act on their own, well then you might be back at square one.

So, a huge issue is ignoring family dynamics as well. So, if there’s tension or mistrust in the family, it can erupt into disputes that can lead to the public trustee stepping in. Whether you want it or not.

Robyn: So, Larisa, why is it so important to tailor the authority level you give to your attorney rather than just, say, ticking every box or giving them full control?

Larisa: Well, because broad powers with no limits can be very dangerous. Not everyone wants their attorney to access their superannuation or make health decisions or give away their money as gifts, you know.

So, you need to really think carefully about what decisions you want someone else to be able to make and under what conditions.

Tailoring the EPOA is really about preserving your autonomy, even when you’re not able to speak for yourself.

Robyn: Can you give us an example of how someone’s personal or family circumstances might shape what goes into their EPOA?

Larisa: Absolutely. So, let’s say you’re in a blended family. You might want to make sure that stepchildren aren’t involved in managing your affairs, or you might want them to be.

Or you might own a business, you could appoint one attorney for your personal matters and a different one just to deal with the business decisions, so far, as you know, the business structuring allows.

We’ve also worked with clients worried about elder abuse. So they include special clauses requiring their attorney to consult someone else before accessing funds or they appoint multiple attorneys who must act jointly or two out of three just to mitigate this risk.

Robyn: What are some specific terms or clauses that people should be thinking about including or excluding based on their situation?

Larisa: So, some key clauses to include might be when the power begins. Now, or upon losing capacity, or a specific time. Limits on gifting or conflict of interest transactions. Like attorneys gifting to themselves, you know money or transferring property to themselves or something.

Oversight, such as requiring your attorney to consult with others or keep financial records and appointing different attorneys for financial decisions versus healthcare decisions based on, you know, their eligibility for that role.

What I would caution against is giving unrestricted access to superannuation or allowing property to be sold without clear instruction. Also watch for clauses that let your attorney change important documents like binding death benefit nominations without checks in place.

Robyn: Yeah, there’s certainly a lot to consider. A lot of people default to appointing their spouse or their eldest child as their attorney. What should be considered when choosing the right person?

Larisa: Oh, this is so important. Just because someone is close to you doesn’t mean they’re the best choice. So, you got to ask yourself, are they trustworthy and financially responsible? Do they live nearby? And are they accessible to you? Appointing someone overseas can be legally complicated and impractical, you know. Can they work well with others? Especially if you’re appointing more than one attorney. Do they, you know, will they get along or cause an issue? Or if your attorneys can’t get along, it can paralyse decision making or end up in the court. Which you certainly don’t want.

Robyn: No one wants.  

Larisa: And finally, will they cause conflict within the family? Sometimes picking a neutral third party like a professional attorney is the smarter move. Just because you might have an obvious choice as to who you pick to be your attorney doesn’t mean that it’s the right choice.

Robyn: Now, Larisa, this is one I hear a lot. What do you say to people who think they’re too young or too healthy to worry about putting an EPOA in place?

Larisa: I say it’s like insurance. You don’t want to wait for your house to burn down before you get insurance, do you? So, the same thing here.

Anyone can have an accident, illness, or an expected event. If you lose capacity without an enduring power of attorney in place, your family can’t just step in and help you. They’ll have to apply to the tribunal and that’s a lengthy, stressful, and can be a very expensive process.

So, it’s not just about the elderly, it’s a vital part of planning for all adults regardless of their age or health.

Robyn: Well, Larisa, thanks for joining us today. And while DIY kits and online forms may seem like a quick and cheap option, they can come with serious risks as you’ve highlighted today.

Thanks for shedding light on the importance of getting proper legal advice when putting these powerful documents in place.

Larisa: Thank you, Robyn.

Robyn: You’ve been listening to law talks here on 4CRB, which you can hear every Friday morning from 9 o’clock.