A lasting power of attorney (LPA) is a powerful legal tool that allows you to choose someone to make decisions on your behalf if you become unable to do so. While more commonly recognized in countries like the UK, in New Zealand, we use a similar concept called the Enduring Power of Attorney (EPA). This guide will take you through everything you need to know about the enduring power of attorney, its purpose, types, and how it works to secure your future in New Zealand.
What is a Lasting Power of Attorney (LPA) or Enduring Power of Attorney (EPA)?
In New Zealand, the closest equivalent to an LPA is an Enduring Power of Attorney (EPA). Like an LPA, an EPA is designed to remain in effect even if the person who created it (the donor) becomes mentally incapacitated. This document is essential for ensuring your personal, financial, and health decisions are handled by someone you trust if you lose the capacity to make decisions yourself.
Why an EPA is Essential
Setting up an EPA ensures that your wishes are respected in times of need. Here’s why it’s an invaluable part of future planning:
- Control Over Who Makes Decisions: By appointing someone you trust, you retain control over who manages your personal or financial affairs if needed.
- Peace of Mind: An EPA offers peace of mind to you and your family, knowing that your welfare and assets will be protected.
- Legal Security: It provides legal authority to your attorney, reducing the chances of family disputes or confusion in decision-making.
- Protects Against Unexpected Events: Sudden accidents or illnesses can lead to incapacity at any age. An EPA helps prepare for such scenarios.
Types of Enduring Power of Attorney (EPA)
There are two main types of EPAs in New Zealand, each serving a distinct purpose:
| Type of EPA | Description |
|---|---|
| EPA for Property | Manages all matters related to your financial assets, property, and finances. |
| EPA for Personal Care and Welfare | Covers personal health and welfare decisions if you cannot make them yourself. |
Note: You can appoint the same person for both types or designate separate individuals for each, depending on your preferences.
How to Set Up an Enduring Power of Attorney
Creating an EPA involves several straightforward steps:
- Choose Your Attorney: This person should be someone you trust completely, as they will have significant control over your finances or welfare.
- Determine the Scope: Specify in the EPA document what decisions your attorney can make. For example, you may allow them to manage only certain accounts or make specific health care choices.
- Seek Legal Advice: Consulting a lawyer to draft and finalize the EPA can ensure the document reflects your wishes accurately.
- Sign the EPA Document: Both you and the attorney need to sign the document in front of a witness to make it legally binding.
Pro Tip: Set any specific limits you want within the document to clearly define the attorney’s powers.
Responsibilities of an Attorney Under an EPA
Once an EPA is in place, your appointed attorney must adhere to specific responsibilities:
- Act in Your Best Interests: All decisions should prioritize your welfare and financial stability.
- Maintain Transparency: The attorney is expected to keep a clear record of decisions, especially financial transactions.
- Avoid Conflicts of Interest: Personal interests should never influence decisions made on behalf of the donor.
- Respect Your Wishes: The attorney should take your values and preferences into account wherever possible.
Potential Risks and Safeguards
While EPAs offer significant benefits, there are also risks if an attorney abuses their power. Here are some safeguards to protect against misuse:
| Safeguard | Purpose |
|---|---|
| Specify Limits in the EPA Document | Outlines exactly what the attorney can and cannot do, minimizing the chance of misuse. |
| Choose a Trusted Attorney | Selecting someone reliable reduces the risk of abuse or mismanagement. |
| Require Regular Reporting | Asking for regular updates or reports can help ensure transparency. |
| Family Monitoring | Encourage family members to stay informed of the attorney’s actions to help identify any potential concerns. |
These safeguards help protect donors from financial or personal risks associated with an enduring power of attorney.
Frequently Asked Questions (FAQs)
Below are some common questions about setting up and managing an EPA in New Zealand:
Q: Can I change my attorney after creating an EPA?
Yes, as long as you remain mentally capable, you can update your EPA to change the attorney.
Q: Can I have more than one attorney?
Yes, you can appoint multiple attorneys. However, you may want to specify if they should act jointly (together) or independently.
Q: What happens if I don’t have an EPA and become incapacitated?
Without an EPA, family members may need to apply to the Family Court for the legal authority to make decisions on your behalf. This can be time-consuming and may lead to family disputes.
Q: Is an EPA only for elderly people?
No, an EPA is beneficial for adults of any age, as it protects against unexpected events that can impact decision-making ability.
Importance of Reviewing Your EPA Regularly
An EPA is not a “set it and forget it” document. Reviewing it regularly is essential to ensure it still aligns with your current wishes and needs. Changes in family dynamics, financial situations, or health can all impact how you might want the EPA structured.
Consider the following:
- Regular Check-Ins: Review your EPA at least every few years or whenever there’s a significant life event.
- Update Contact Information: Ensure that the contact details of your attorney are current.
- Revise If Necessary: If relationships change, or you have new preferences, update your EPA to reflect these.
How to Revoke an EPA
If circumstances change or you no longer trust your appointed attorney, you can revoke your EPA. Here’s how:
- Inform Your Attorney: Let them know in writing that you are revoking the EPA.
- Notify Relevant Parties: Inform any institutions or individuals who may be affected, such as banks or healthcare providers.
- Create a New EPA: You may choose to set up a new EPA with a different attorney if desired.
Note: Only the donor can revoke an EPA, and they must have the mental capacity to do so.
Conclusion: Securing Your Future with an EPA
In summary, an Enduring Power of Attorney is an essential tool for anyone who wants to ensure their future decisions align with their wishes. Whether young or old, an EPA offers invaluable peace of mind by appointing someone to manage your affairs if you become incapacitated. By choosing the right attorney, setting clear boundaries, and keeping your document updated, you can create a solid plan that protects both your assets and your personal welfare.
An EPA is not just a legal formality—it’s a way to retain control over your life, even when the unexpected happens. If you’re ready to set up an EPA, consult with a legal professional to make sure it fits your unique needs and offers the protection you deserve.
