Bowen Buchbinder Vilensky

Enduring Power of Attorney – Registering Your Interest?

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By Les Buchbinder, Director, with the assistance of Giuseppe Graneri, Associate at Bowen Buchbinder Vilensky Lawyers

24 January 2017

The Australian Law Reform Commission (“ALRC”) has been conducting a review into elder abuse.

One of the proposals that the ALRC is considering is the establishment of a national register of Enduring Powers of Attorney (“EPAs”). The purpose of this register system is to reduce opportunities for appointed attorneys, or other people who may not be legally appointed, from using the power created in EPAs as a “licence to steal” from their elderly parents or friends. The proposed register will apply to enduring documents, (ie documents that survive the creator’s loss of mental capacity) including EPAs and Enduring Powers of Guardianship (“EPGs”).

There have long been calls for a national register of EPAs as there is presently no way of checking the validity of such a document when an elderly person’s relative, friend, or carer attempts to withdraw or transfer money to undertake the transaction in the name of the donor under the power of the EPA.

Arguments against the ALRC’s proposal for a national register of EPAs include debate about how effective a preventative measure, such a register, will be and whether or not developing such a registration system will increase the overall cost of having an EPA.

What is an EPA?

An EPA is a legal document that enables a person to appoint another trusted person to make financial and/or property decisions on their behalf in circumstances when they themselves are not in a position to make those decisions or undertake those actions. An EPA can be executed by anyone over the age of 18 and can be either of broad general effect or can be restricted to certain transactions only.

The benefit of an EPA is that unlike an ordinary Power of Attorney, it will continue to operate even if the donor (the person giving the power) loses mental capacity. However, an EPA ceases to be of effect on death of the donor.

An EPA does not permit an attorney to make personal and lifestyle decisions, such as decisions (for example) as medical treatment or residential decisions. The authority of the attorney is limited to decisions about the donor’s property and financial affairs.

EPAs can be revoked but there are certain formalities to be complied with in order to do so.

How does an EPA Differ from an EPG?

An EPG is a legal document that authorises another person to make important personal, lifestyle and treatment decisions on your behalf should you ever become incapable of making such decisions yourself. This person is known as an Enduring Guardian.

An Enduring Guardian can be authorised to make decisions about things such as where you live, the support services you have access to and the treatment you receive. Unlike an attorney appointed by an EPA, an Enduring Guardian is not authorised to make property or financial decisions on your behalf.

EPGs typically permit the Enduring Guardian to:

  • decide where you live, whether permanently or temporarily;
  • decide with who you wish live;
  • make treatment decisions on your behalf to any medical, surgical or dental treatment or other health care (including palliative care and life-sustaining measures such as assisted ventilation and cardio-pulmonary resuscitation); and
  • seek and receive information on your behalf.

What Happens if you don’t have an EPA or EPG?

Many people run successful businesses and companies that have in place detailed policies and procedures to manage the company. What is most surprising is that these same people often have not implemented the same planning for their own family and personal affairs.

The cost of failing to have a proper succession plan, including a current Will, EPA and EPG can be significant. In particular:

  • There is an obvious economic cost that results from families scrambling to obtain a valid legal authority to act on behalf of someone who does not have capacity; but also
  • It is the human and emotional cost that can often be more significant and telling.

There are examples of children who during their parents lifetime become impatient and seek to claim their perceived inheritance before they are lawfully entitled to receive it. This often has disastrous consequences for the parents and has the real potential to destroy families. It is therefore vitally important that a carefully worded EPA and EPG are put into place as part of an overall Estate plan and that the correct people are chosen to receive these powers. It is also important to ensure that affected people are aware of the existence of an EPA and EPG and who are the recipients of these powers.

Those who do put into place a detailed and carefully considered succession plan which includes an EPA and/or an EPG will benefit from the knowledge and peace of mind that if they do not have sufficient mental capacity then they have appointed others in whom they trust and in who they have confidence to successfully navigate the circumstances at hand for them. If a national registration scheme, such as that contemplated by the ALRC, comes into effect in the near future, this will likely enhance the confidence in EPAs and provide a level of comfort to those who will be affected by them.

If you would like to discuss obtaining an EPA or EPG or to discuss you estate planning circumstances, please do not hesitate to contact us.

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