An enduring power of attorney (EPOA) is an important legal document that appoints another person or persons to make crucial life decisions for someone if and when they lose capacity to make such decisions for themselves.
While making an EPOA is particularly relevant for those of advancing years who may become vulnerable to conditions such as dementia, a person can potentially lose capacity to make life and financial decisions at any stage of life. A terrible car accident, a stroke or some other debilitating condition can rob a person of essential capacity.
The chief benefit of making an EPOA while you (the principal) have full mental faculty is that the document provides some control over how your financial and personal affairs will be conducted once you lose capacity, rather than leaving such decisions to the public guardian or the courts to make.
What is an EPOA empowered to do?
An EPOA can be appointed to manage both your financial matters and/or your personal and health matters.
An attorney empowered to make financial decisions on the principal’s behalf can do things such as pay bills, prepare tax returns, manage investments and deal with property. An attorney appointed to make personal and health matters can make decisions about where the principal will live and who with, as well as certain medical decisions, including appropriate treatment options and medicines.
It’s important to note that the principal may limit the power of the attorney in the EPOA document. A clause in the document may prevent an attorney appointed to manage financial affairs from selling the family home, for instance, or require them to consult other family members before acting. A person may also appoint two or more attorneys in the EPOA, ensuring the power of each attorney is in check to the other attorney/s.
A person appointed as an attorney has important responsibilities to the principal, including:
- keeping accurate records of financial and legal transactions;
- keeping the principal’s property separate from the attorney’s;
- obtaining professional financial and/or taxation advice on the principal’s assets, particularly where significant assets or complex financial arrangements are involved;
- avoiding disclosure of any confidential information while acting as attorney, unless authorised by the principal.
Who is appropriate as an attorney?
A person appointed to carry out the duties of an attorney needs to be a responsible person trusted by the person making the EPOA, such as a family member, close family friend, or trusted, long-term professional such as an accountant, financial adviser or lawyer. Ideally an attorney appointed to make financial decisions will be someone with experience or understanding of such matters.
There are certain requirements for a person to be appointed under an EPOA:
- the person is at least 18 years;
- the person is not a paid carer, health provider or a residential service provider for the principal; and
- for an EPOA including financial matters, the person is not bankrupt or taking advantage of the laws of bankruptcy or similar legislation.
When does an EPOA take effect?
For personal matters, including health matters, an EPOA only takes effect when the principal loses capacity to make those decisions independently. For financial matters, a principal can specify in the document when, and under what circumstances, the attorney’s power can be exercised. Where an EPOA is silent about when the power to make financial decision commences, the attorney’s power is effectual immediately after the EPOA is validly executed.
In the event that the attorney’s power to make a decision depends on the principal having impaired capacity for that matter, a person dealing with the attorney may ask for evidence of the principal’s impaired capacity, such as a medical certificate. If a person is concerned about a person exercising powers under an EPOA, they may apply to the Queensland Civil and Administrative Tribunal or the Supreme Court for a declaration about a principal’s capacity and about whether an attorney’s power has commenced.
The importance of good legal advice
A person considering making an EPOA should seek the advice of experienced legal professionals such as our team at PD Law. We can provide greater detail on your selection of an attorney or attorneys as well as frame this important document in a way which meets your needs and addresses your concerns about how your affairs will be managed in the event you lose capacity to make these important decisions. Contact us today for an initial chat about how we can help you with enduring power of attorney.
