What is an Enduring Power of Attorney?
An Enduring Power of Attorney (“EPA”) is a legal document that allows you to appoint one or more trusted individuals to make decisions on your behalf if you become incapacitated. There are two types of EPAs:
Enduring Power of Attorney for Property: This type allows you to appoint someone to handle your financial and property matters, including managing farm assets, investments, and other property. In a rural context, this is crucial for ensuring that agricultural operations and farm management continues without disruption.
Enduring Power of Attorney for Personal Care and Welfare: This allows you to designate someone to make decisions about your personal care and health, including medical treatment and living arrangements. In rural areas, where specialised healthcare services might be less accessible, having a trusted person manage your care can be particularly important.
What happens when a person does not have an EPA?
When a person does not have an Enduring Power of Attorney (EPA) in place, the management of their financial and personal affairs can become complex and challenging if they become incapacitated. This situation can lead to several potential issues, including delays, disputes, and additional stress for family members. Here’s an example illustrating the impact of not having an EPA for Property or for Personal Care and Welfare.
Farmer Frank
Background: Frank, a 65-year-old farmer living on his own in rural New Zealand, has always managed his own affairs diligently. He owns shares and is the director of his farming company, has several large investments, and a bach in the Coromandel. He separated from his wife many years ago and his two children live in London. Even though Frank has made a Will, he has never quite got around to setting up an Enduring Power of Attorney. He thought he would get to it when he was “older”.
The Incident: One day, Frank is in the milking shed doing the morning milking while his farm worker is away on holiday, and he unexpectedly suffers a severe stroke. He is rushed to the hospital and, while his physical health stabilises, the stroke has left him with significant, permanent cognitive impairments that prevent him from managing his financial and personal affairs.
The Issues:
Financial Management: Frank’s bank accounts and farm operations require immediate attention. Bills need to be paid, and important financial decisions must be made to maintain the farm’s productivity. Without an EPA, there is no designated person authorised to handle these matters on Frank’s behalf. The bank requires any designated person to produce evidence that they have been legally appointed as Frank’s EPA for Property to be able to make payments from the farm account.
Healthcare Decisions: Decisions about Frank’s ongoing medical treatment and personal care need to be made. Without an EPA for Personal Care and Welfare, there is no clear authority to make these decisions. This could lead to potential delays and uncertainties in relation to Frank’s care, for example, where Frank will now live, as he can no longer manage at home alone. Residential care homes require that all residents hold an EPA for Property and for Personal Care and Welfare.
Court Applications: Because Frank does not have EPAs in place, Frank’s family must apply to the Family Court to appoint a property manager and welfare guardian. This process is time consuming and costly. The cost of a Court application is roughly six times the cost of obtaining both EPAs from a lawyer, and that’s if everyone in the family agrees.
Family Disputes: The absence of a clear legal document outlining Frank’s wishes can lead to disagreements among family members about how to manage his affairs while the Court orders are being obtained. This can cause tension and conflict, especially if family members have differing opinions on what actions should be taken or who should be appointed by the Court as the property manager and welfare guardian. If there is disagreement, this substantially increases the time and costs involved in the Court application.
Farm Management: Without EPAs in place, the day-to-day operations of Frank’s farm may be disrupted. There may be delays in paying farm workers, managing livestock, and/or dealing with suppliers, potentially leading to financial loss. One of the immediate issues on the farm is that the cows need to be milked and relief milkers must be urgently found.
Asset Management: Frank’s investments are about to mature, and without any authority, his financial advisor cannot reinvest them. The lack of an appointed EPA means that there could be missed opportunities and financial loss for Frank.
Emotional Stress: The sudden incapacity of a loved one can be emotionally overwhelming. Frank’s children are already dealing with the distress of the Frank’s medical condition and recovery process. The lack of an EPA exacerbates this stress by creating uncertainty about how best to handle his financial and personal affairs.
Conclusion
The scenario of Frank highlights the significant challenges and complications that can arise when an individual does not have an EPA in place. The absence of an EPA can lead to financial and operational disruptions, family disputes, and additional stress and uncertainty.
By setting up an EPA, individuals can ensure that their affairs are managed according to their wishes, even if they become unable to make decisions for themselves. This proactive planning provides peace of mind and helps avoid the complexities and potential conflicts that arise in the absence of an EPA.
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This article was written by Shelley Greer and Renee Dunn
