Written by Angela Teng.
Many people think that an Enduring Power of Attorney (EPOA) is only for the elderly – to give someone they trust the legal authority to act for them and make financial and legal decisions if they lose the capacity to do so themselves.
In 2020, approximately 75 per cent of people who made an EPOA with us were over 60 years of age. But the reality is that there are many situations at all stages of life where a person over the age of 18 may not be in a position to make or act on decisions themselves and would benefit from having an EPOA in place. These include:
Josephine’s employer sent her on a two-year assignment to Paris. Before she left, she granted her parents an EPOA so they could look after her car, bank account and her unit in Ryde.
As soon as Josephine left, her parents were able to sell the car and find a real estate agent to rent out her unit.
When it was time for her assignment to come to an end, Josephine’s dad gave notice to the tenant to vacate from her unit, ordered furniture and purchased a new car using the funds from her bank account, so that she did not have to stress about her living and transport needs as soon as she returned.
With improved online access today, it is often possible to manage finances from anywhere, anytime. But if the worst was to happen and you find yourself suddenly incapacitated, your life can change in an instant and you will need the help and support of others.
It is common to think that if you lose capacity for any reason, you can rely on family members (such as a spouse or adult children) to act for you. However, nobody automatically has the legal right to manage your affairs for you unless they have been granted an EPOA in advance. If there is no EPOA in place, family members will have to apply to a tribunal for the authority to deal with your affairs (known as a financial management order) and the tribunal will decide who should be appointed to handle your affairs. It is not only a lengthy and involved process, but the person appointed may not be who you want.
Stephen and Joanne have been married for three years. Neither have an EPOA in place as they believed they were young and did not need it.
In 2019, Stephen was in a car accident and suffered serious head injuries.
Stephen owned an accounting business and rented an office in the CBD. Joanne was not able to act immediately on matters such as appointing someone to manage and wind up the accounting practice, subletting the office and stopping long-term subscriptions. As Joanne rushed to apply to the tribunal for a financial management order the business was in abeyance and lost thousands of dollars.
In the same way people buy insurance policies to safeguard their home, car and health, an EPOA should be made to entrust someone to look after your legal and financial affairs if you cannot, regardless of age, health, financial or relationship status.
Just as important is the attorney(s) you choose under an EPOA. The attorney(s) will have considerable power over your affairs, so it is important to get it right.
Your attorney(s) should be capable of managing legal, financial and taxation matters, have your best interests at heart and be willing to seek appropriate advice where it is needed.
When appointing an attorney, you should consider how they manage their own affairs. For example, if the person has large financial debts, a substance addiction or gambling problem, they are probably not suitable attorneys.
After suffering a stroke, Maurice was hospitalized and an EPOA appointing his daughter Nancy as his attorney was activated.
Nancy sold Maurice’s home to help him transition into an aged care facility. She then purchased an investment property in her own name using the remaining funds from the sale of the property. Nancy believed that this was ok as Maurice’s money would be hers to inherit eventually.
Without his savings, Maurice was not able to pay for his aged care facility fees in full, nor for additional services that he would have liked such as access to paid TV and arranging a hairdresser.
If you are appointing more than one person as your attorney, you should consider their relationship with each other and whether they can act amicably.
If you feel that there is no one suitable you can entrust to manage your legal and financial affairs, or if you believe appointing one or more family members can lead to stress or conflict, you can appoint a professional such as NSW Trustee and Guardian as your attorney.
To make an EPOA or update an existing one, talk to one of our Wills and estate planning consultants who can help you plan ahead.
* Names and identifying details have been changed to protect the privacy of individuals.
