You need to think carefully about who you give this power to. There are various types of power of attorney. The most common type is the enduring power of attorney (EPA) which is flexible and will allow the person you have named to continue acting even if you are no longer able to make decisions yourself.
An EPA is a document in which you name a person (called your attorney) who is to have power to act on your behalf and make decisions for you. In some cases, two or more people may be appointed. You are known as the donor, the person who is giving the power of attorney. The person who you appoint to act on your behalf is the attorney. An attorney does not need to be a lawyer but should be someone that you trust to do the right thing for you. You can name two or more attorneys to manage your property but you need to say if they must agree on all decisions (act jointly) or if any of them can act alone (severally) or decisions can be made by a majority of the attorneys.
There are two types of EPAs, those for Property and those for Personal Care and Welfare. Property means everything that you own, including bank accounts, investments and so on. A personal care and welfare attorney is concerned with questions such as where you are to live and are you being properly cared for.
Life can be uncertain at times. Anyone at any age can have an accident of be hospitalised with a serious illness. Someone needs to make sure the mortgage and other bills are paid. Someone needs to ensure your children and other loves ones are being looked after if they were dependent on you. Someone should check that you are being properly care for.
If you are unable to make decisions for yourself and you have not signed an EPA, then it may be necessary to apply to the Family Court for an order. The list of people who are allowed to apply to the court includes a relative, a social worker, a medical doctor or the manager of the place where you are being cared for. The court can appoint a welfare guardian for your personal care and welfare. Getting these appointments made takes some time. The court is first required to appoint an independent lawyer to look into matters and report to the court. The cost of the independent lawyer's report may need to be paid from your money. This adds to the costs of getting the Family Court to appoint someone.
Unlike an EPA attorney, a property manager appointed by the court is obliged to report to the court every year providing full statements of account. Also property managers and welfare guardians usually have to go back to the court every three years to seek reappointment. Again there is a cost for all of this.
You can sign an EPA if you are over the age of 18 and are competent to make decisions for yourself. If you do not have the necessary mental competence, then the EPA will not be valid. In the case of elderly people over 70 years of age or others who may not have full mental capacity, it is usually wise to get a doctor's certificate before they sign the EPA. The doctor needs to be satisfied that the donor understands what an EPA is and just how much authority is being given to the attorney by the EPA.
Because signing an EPA is an important step, there are rules about who can witness your signature as donor. Remember that creating an EPA gives considerable power over your property affairs or personal care and welfare. However your property attorney's paramount consideration under the PPPR Act is you use your property to promote and protect your best interests, while your personal care and welfare attorney's paramount consideration is to promote and protect your welfare and best interests.
An EPA for personal care and welfare only comes into effect if you (the donor) become mentally incapable. The personal care and welfare attorney can only make important decisions if a doctor has signed a certificate to say you are mentally incapable. This is sometimes informally called "invoking the EPA". For other personal care and welfare decisions, the attorney must have reasonable grounds for thinking you have become mentally incapable.
With property EPAs, you have a choice. You can decide that the property EPA is to effective only if you are mentally incapable. In that case, the property attorney may need to ask for a medical certificate before taking action. As an alternative, you can say the EPA is to be effective as soon as you sign it. This can avoid the need for a medical certificate. It can also be useful to have an EPA attorney who is able to act if you are overseas or temporarily unavailable to deal with your finances.
At any time you may cancel your EPA provided you are still mentally competent to do so. This can be done by giving notice of cancellation in writing to the named attorney or attorneys. These is a clause in the EPA form which you can choose and this will have the effect of cancelling any earlier EPA. However it is important to understand that this cancellation takes effect once a copy fo the new EPA has been sent to the previous attorney.
You can suspend your EPA by notice in writing to the attorney at any time. Until an attorney is notified of cancellation or suspension of the appointment, the attorney can continue acting on your behalf.
The Family Court can cancel the EPA if it believes the attorney is not doing the right thing or will not do so in future. Alternatively the court could appoint a property manager or welfare guardian whose authority takes priority over the attorney named in the EPA. However the court can only do this if an application is made by a relative or some other authorised person. 
Finally, any EPA ceases to have effect once you have dies. After your death, authority to manage everything you own passes to the executor named in your Will. If you have not made a will - or the named executor is not available to act or does not want to act as executor - then the High Court may appoint an administrator to administer your estate.
You need to think very carefully about naming the right person or people in your EPAs. You are giving them a lot of responsibility. In addition, your attorney or attorneys may be called on to make decisions when you are no longer able to do so and you will be unable to keep an eye on what your attorneys are doing.
Each attorney need to be someone you can trust to do the right thing. You also need to think about your family dynamics. If you name two family members, both of whom you trust absolutely, but they are unable to work together, then this can be a recipe for disaster. You should talk this through carefully with your lawyer before deciding who to name in your EPA.
Most people name a family member. Often the first named attorney is your spouse or partner, which one or more of your children being names as successor attorneys. These successor attorneys step into the role if the attorney who is names first can no longer carry out that role. It is possible to name a professional such as a lawyer or accountant as an attorney. They will normally want the EPA to include a clause allowing them to charge for their time in managing your finances and property.
Although there is not automatic check on how well the attorneys are exercising their powers, the attorneys do have a legal duty to consult you, as far a practicable, and anyone else specified in your EPA.
The Family Court can appoint a property manager or welfare guardian whose authority will override the attorney. The Family Court also has authority to supervise attorneys and give them directions about the steps they make. However, someone needs to apply to the court for that to happen. You can add conditions in your EPA about who the attorneys are to report to - see more.
There are strict rules about who can witness your signature as donor or the EPA. The witness must be independent of the attorney or attorneys. When you sign the EPA, your signature must be witnessed by a lawyer, a qualified legal executive or an authorised officer or employee of a trustee corporation who is independent of the attorney. That witness must give you an explanation of the effects and implications of the EPA and advice on certain matters. The attorney's lawyer cannot do this.
There is no restriction on who may witness the attorney's signatures except that the witness cannot be the donor of the witness to the donor signature. These rules are designed to ensure that the donor is not signing away control under an EPA without the opportunity for independent advice from a suitably qualified person.
You are able to add a number of conditions on your EPA form. You should talk to your lawyer or approved witness about whether these will be practical and realistic. You do not want your attorney to be so hampered by restrictions that the attorney cannot get anything done.
One clause that is often included in EPAs is a direction that the attorney or attorneys must consult with various names members of your family. It is important that family are kept fully informed as this can avoid disputes later on. You can go further and require the attorney to give reports or statements of account, perhaps each year or more often if you prefer. Again you want to be careful not to create uneccessary burdens for your attorneys.
Even if you say nothing about this in your EPA, your attorney is still required to consult you, the donor of the EPA, if you are able to be consulted.
When you appoint your attorneys, you will need to be clear about what you want from them. You should discuss it with them, and, once they are appointed, you should make sure they know what property you have, where you keep relevant documents and what your wishes would be in certain circumstances. For instance, you may want them to buy birthday or Christmas gifts for family members, or offer support to dependents, or make regular donations to charity. They cannot do any of these things, or do any other thing for the benefit of others or themselves, unless their authority to do so is clearly set out in the EPA.
There are also a number of things attorneys for personal care and welfare cannot do. For example, they cannot make decisions in relation to marriage or civil union or adoption of children, refuse medical treatment intended to save your life — or treatment to prevent serious damage to your health — or consent to some types of medical treatment such as brain surgery.
No. Your will only takes effect when you die. Your enduring power of attorney deals with decisions that are taken while you are alive. On your death, the EPA comes to an end and your will takes over.
An advance directive (sometimes called a “living will") is intended to provide guidance for doctors and your family when decisions need to be taken about medical intervention while you are unable to make decisions for yourself. Doctors and family are often uncertain whether or not to go to extreme measures in order to keep someone alive. An advance directive can be helpful in giving family and doctors an idea of what you would want if you were able to speak for yourself. Your attorney for personal care and welfare should also be consulted at that time. This is quite different from both your will and EPA. It is always a good idea to make sure your family, your attorneys and your doctor are aware of your views in this respect.
Your lawyer can help you with preparation of an advance directive and also with a will dealing with your property and finances. Your attorney named in your EPA for personal care and welfare may take into account what you say in your advance directive.
Each country has its own laws about powers of attorney. Most English speaking countries have their own specified form of EPA. So an EPA made under the laws of another country is unlikely to be recognised in New Zealand. The best advice is to make an EPA in each country where you have property of any value or where you regularly spend an amount of time. It is also unlikely that a New Zealand EPA would be recognised in other countries. Not all countries have laws allowing EPAs to be used at all. You should check with a lawyer in the country concerned if you think you need an EPA in another country.
In order to sign a valid EPA, the donor must have sufficient intellectual capacity to understand the document that is being signed. It is not necessary that the donor should understand every detail of what it is the attorney may have to do. It is enough that the donor understands, in general terms, the nature of an EPA and that the EPA gives the named attorney/s authority to make decisions about property or personal care and welfare.
If there is any doubt about the intellectual capacity of the donor, then it is important to obtain a medical certificate from a suitably qualified medical doctor before the EPA is signed. Your lawyer can advise the doctor about the requirements for intellectual capacity in this situation and can prepare a draft certificate for the doctor covering the relevant points.
Where a person is severely handicapped, he or she may be unable to sign an EPA due to lack of full intellectual capacity. In that case it may be necessary to apply to the Family Court for appointment of a property manager and/or welfare guardian. The application can be made by any one of a number of people including a relative, a social worker, a medical doctor, a representative of an organisation such as IHC or the manager of the place where the person is being cared for.
See our glossary for more EPA definitions.
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