An Enduring Power of Attorney (‘EPOA’) is one of the most important legal documents that everyone should have. It is as essential as a person’s Will, if not more important as it comes into effect while you are still alive! Attwood Marshall Lawyers Wills and Estates and Family Law Department Manager, Donna Tolley, discusses why people should prioritise making an EPOA and what can happen if you try to complete this document yourself and get it wrong.
When you are creating an Enduring Power of Attorney, you are effectively choosing a person or persons (“Attorney”) to make financial, personal, and health decisions on your behalf in the event you lose capacity and are unable to make these types of decisions for yourself. You can choose whether you have your Enduring Power of Attorney effective immediately, or you can select a date that you wish it to come into effect.
When it comes to financial decisions, an attorney can make decisions that relate to the principal’s financial, property and legal affairs. An Attorney can complete documents on behalf of a principal and deal with organisations such as Centrelink and other government agencies, telco providers and financial institutions. An Attorney can enter legal contracts, including selling a principal’s property or enter into a contract with an aged care facility or home care provider. They can also operate the principal’s bank accounts, pay the principal’s bills, and sell or buy shares in the principal’s name. If provided that the Attorney does this per their duties and obligations as an Attorney, it is not a conflict of interest.
An Attorney will have their limitations and they can not change or revoke a principal’s Will or Enduring Power of Attorney, vote for them or act as Director of a Company in the principal’s place.
When it comes to personal decisions, an Attorney can be granted the power to make decisions about the type of care the principal should receive, or should not receive, where the principal will live, whom they live with, and who can visit them. Health decisions that an Attorney can make relate to the principal’s health care including any treatment they receive by healthcare providers, medical procedures they undertake to diagnose, maintain, or treat the principal’s physical or mental health conditions.
Who can be appointed as an Enduring Power of Attorney?
A principal can appoint one or multiple attorneys to handle both their financial and personal and health decisions or they can choose to appoint different attorneys to look after the different roles.
It can be a good idea to appoint multiple Attorneys so that they can keep each other in check and to also have a reserve in place if something unexpected happens to one of the Attorneys.
Sometimes a principal may choose to appoint a professional as their financial Attorney, knowing that they have the ability and experience to manage financial affairs. They may then choose to appoint family members to make personal, and health decisions on their behalf. This is common as a family generally have a close personal relationship and know the principal’s views and wishes.
The terms for each Attorney can be different and can be tailored accordingly within the Enduring Power of Attorney document to outline exactly what types of decisions that person has the authority to make, if there are limitations of the Attorney’s powers, and if they need to make decisions in conjunction with other parties.
An Attorney must be at least 18 years old and not be a paid carer or health provider of the principal. In addition, an Attorney must not be bankrupt or have any arrangement in place under the Bankruptcy Act 1966 (Cth) concerning their financial affairs appointed as an Attorney for financial matters.
The duties and responsibilities regarding an EPOA must be strictly adhered to. These general responsibilities and duties stipulate that an Attorney must:
- Act honestly and diligently to protect the principal’s interests
- Obey and follow the terms set out in the Enduring Power of Attorney
- Act cautiously, judiciously, and in the principal’s best interests when managing the principal’s finances and property
- Avoid conflicting transactions unless specifically authorised in the Enduring Power of Attorney document
The pitfalls of trying to “do-it-yourself”
Despite these documents being readily available to download online, or by purchasing a DIY Enduring Power of Attorney Kit, it is not advised to complete this without obtaining legal advice.
When people land on websites selling DIY Enduring Power of Attorney kits they are promised that it is “simple and straightforward”. These websites also state that the documents are tailored to meet the laws of the state or territory that you live in, however it is important to understand that these are templates. If you complete a templated kit, you are doing so without any advice as to the effects of the document and how to go about ensuring that your wishes will ultimately be fulfilled according to your instructions.
When creating a DIY Enduring Power of Attorney, the document is legally valid, even if you do not complete it correctly or it does not reflect your intentions as you had hoped. This is where the consequences can be catastrophic.
The power you are ultimately granting someone when appointing them as your Attorney is wide-reaching. A qualified estate planning lawyer can assist you in understanding who may be the most suitable person, or persons, to appoint for the role, what clauses you may need to include to ensure your wishes and your instructions are clear and concise for the people you are appointing.
Without the proper legal knowledge, many people may not know or contemplate how and when certain clauses would be relevant to them.
These include things such as:
- Your wishes on whether your wish to be resuscitated. If you have a DNR clause in your EPOA, the challenging and emotional decision is taken away from your Attorney.
- Your strong wish to stay in your own home until your death and not wanting to be placed in an aged care facility.
- You are directing that your Attorney can reimburse themselves for reasonable out of pocket expenses incurred in acting for you as your Attorney.
- To allow your attorneys to obtain a copy of your Will when making financial decisions that may impact upon the provisions in your Will.
- The ability for your Attorney to access, manage, distribute, deal with and dispose of your digital assets.
- The power for you to renew, confirm or reinstate any binding death benefit nominations for your superannuation entitlements.
- Permit your Attorney to give gifts to close family members and friends or make donations on your behalf.
- You allow your Attorneys to continue providing for their spouse or child from the principal’s resources.
- Requesting your Attorney to obtain appropriate financial and legal advice before making any significant decisions.
- You authorise your Attorney to obtain your private, sensitive medical information, records, and documentation.
Suppose you make an EPOA, and your document does not contain the appropriate legal binding clauses, and you lose capacity. In that case, your attorney will need to apply to QCAT (Queensland Civil and Administrative Tribunal) or NCAT (New South Wales Civil and Administrative Tribunal) to make the appropriate orders. The time it takes for the matter to be heard can be a lengthy and involved process, which can be expensive. Not to mention the additional pressure and turmoil you may be putting on your Attorney, which could have been avoided if the Enduring Power of Attorney was executed correctly in the first place.
There is also the issue of undue influence when executing an Enduring Power of Attorney document. If you have not documented your instructions clearly, and your appointed Attorney does indeed carry out your wishes in line with what they believe to be in the principal’s best interests, there can be a presumption of undue influence. An Attorney may be exposed to risks of litigation if any decisions they are making are bought into question. Especially if they enter conflict.
These are the types of issues an experienced estate planning lawyer will discuss when you are completing this document to ensure that your best interests will be protected and you appoint the most suitable person, or persons, to the role whom you trust implicitly.
The value of an estate planning lawyer
Enduring Powers of Attorney documents are a complex document that should not be underestimated. It is necessary to review every aspect of the principal’s life to tailor the document and ensure that it fully reflects the principal’s wishes. Sadly, we often see where people have not seen the value in having a qualified lawyer prepare this document and they have chosen to download and complete one from the internet. It is often the case that you get what you pay for. We often see EPOAs that do not contain the appropriate clauses to assist the Attorney in effectively carrying out their role without proper legal advice.
We often see where a husband and wife have prepared their EPOAs, appointing each other as their Attorney, having them witnessed by a local Justice of Peace. Naturally, they are pleased to have saved the money instructing a lawyer to prepare these documents. But unfortunately, those EPOAs are generally missing essential clauses, and when Attorneys come to us for assistance, the principal has lost capacity, and there is no easy, or cheap fix.
The biggest issue we see is when a party needs to enter a conflict transaction, and there is no clause in their EPOA to allow them to do that. This has become evident when one of the parties needs to sell the jointly owned family home, which is now far too big for them and raise the RAD for the other party to enter a nursing home. Without the appropriate conflict clause, the party (as Attorney) cannot sign the contract or transfer on behalf of the principal, which is considered a conflict transaction.
We also see where the husband and wife have not considered the appointment of reserve attorneys. This means that if they both lose capacity simultaneously, there is no reserve attorney. Then the family must make an application to QCAT to be appointed. These are just a few of the common issues we see arise from DIY EPOAs, however, the list is long and given the extensive powers of this document, it is important to get advice to ensure you get the document right the first time.
Attwood Marshall Lawyers – helping people plan for the future to ensure they have peace of mind
Our experienced estate planning lawyers thoroughly discuss the requirements of our clients when drafting an Enduring Power of Attorney to it provides peace of mind and the client knows that if something does happen, the person, or persons, they trust most in the world will look after them and their affairs and carry out their wishes.
It is vital to ensure that there is no ambiguity within these documents to reduce the risk of any disputes or arguments arising when the document comes into effect.
As a leading wills and estate planning law firm, Attwood Marshall Lawyers takes a comprehensive approach to estate planning and our team practice exclusively in this area of law.
For assistance with drafting an Enduring Power of Attorney or revoking an Enduring Power of Attorney, our team are ready to help. Contact our Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, mobile 0423 772 555, email email@example.com or free call 1800 621 071 at any time.