A couple signed Enduring Powers of Attorney ahead of going overseas.  Fast forward 15 years, and they now need to use these Enduring Powers of Attorney because one of them has lost capacity. 

Unfortunately, when they prepared the Enduring Powers of Attorney, they did not appoint each other. They had appointed their respective parents who have since passed away. 

As the couple now did not have valid Enduring Powers of Attorney in place, this meant that the one who still had capacity had to apply to the Court to be appointed as a Property Manager and Welfare Guardian, which is a long and costly process.

What is an Enduring Power of Attorney?

There are two types of Enduring Powers of Attorney.  There is one for Property which deals with assets such as properties, bank accounts and KiwiSaver, and there is one for Personal Care and Welfare which only deals with health matters. 

You can decide if your Enduring Power of Attorney for Property comes into effect immediately and continues once you lose mental capacity, or only comes into effect once you lose mental capacity.  You are also able to appoint more than one Attorney to act at the same time. 

The Enduring Power of Attorney for Personal Care and Welfare only comes into effect once you lose mental capacity.  You are only able to have one Attorney acting at a time for Personal Care and Welfare. 

Things to consider

Is your Enduring Power of Attorney valid?

One of the main things to ensure is that your Enduring Power of Attorney is valid.  For example, that it has been signed by all parties, dated and completed on the correct and original form (if not signed during the Covid 19 Pandemic).  If these are not completed before the Donor loses mental capacity, then the Enduring Power of Attorney will not be valid.  See our article for more information: Key issues that can trip you up when putting in place an Enduring Power of Attorney  

When do you want your Enduring Power of Attorney for Property used? 

You can elect that your Enduring Power of Attorney comes into effect immediately, which would enable your Attorney to assist you while you still had mental capacity and to continue to assist you once you lose mental capacity. This is called an “open” Enduring Power of Attorney.  While you have mental capacity, your Attorney can only act on your instructions.

There is a difference between mental capacity and physical capacity.  The Enduring Powers of Attorney only deal with mental capacity.  Therefore, if you had a stroke and no longer had physical capacity but still had mental capacity, if your Enduring Power of Attorney only came into effect once you lost mental capacity, your Attorney would not be able to activate and use the Enduring Power of Attorney to assist you. 

An Enduring Power of Attorney that only comes into effect once you lose mental capacity is called a “closed” Enduring Power of Attorney.

Do you have more than one Property Attorney and do they have joint or several powers? 

If their powers are joint, then if one of them passes away or loses mental capacity, the Enduring Power of Attorney becomes invalid.  To avoid this situation, you should ensure that your Attorneys have joint and several powers, which means that where practical they must act together but the Enduring Power of Attorney will not become invalid if one of them passes away or loses mental capacity.  Note you need to consider if you trust the attorneys to separately (severally) make decisions before giving them joint and several powers.

Do you have a backup/successor Attorney?

This is the person who would step in if your Attorney could no longer act for you.  It is always a good idea to appoint a backup/successor Attorney, especially when a couple is appointing each other.  Future proofing your Enduring Power of Attorney by appointing a backup/successor Attorney ensures that it is less likely to become invalid if your Attorney’s circumstances change. 

Have you got married, divorced or separated since you signed your Enduring Power of Attorney?

An Enduring Power of Attorney will not automatically be revoked upon marriage, separation or divorce.  Therefore, if your personal situation has changed, you may need to consider revoking your current Enduring Powers of Attorney and putting new ones in place.

Is your Attorney still the right person for the job?

Your Attorney will essentially be stepping into your shoes and making choices based on what they consider you would do if you were able to make that decision yourself.  Do you think your Attorney will make the same choices you would?  If not, you may need to consider appointing someone else.

It also could be that the person you appointed is someone you no longer see or speak to, or they may have since passed away or lost capacity themselves. 

Another point to consider is whether your Attorney still wants to act for you. 

What decisions will your Attorney be able to make?

If you have not included any restrictions on your Attorney’s powers, then with regards to Personal Care and Welfare, they will be able to make all decisions required in respect of your health and wellbeing.  They will however not be able to enter you into a marriage, file for divorce on your behalf, adopt any children for you and/or sign you up to any experimental medical treatment, among other restrictions.

Your Attorney for property matters will be able to make decisions regarding the management of your assets and about where you should live.

You can include restrictions in the document on what you want your Attorney to be able to do if you choose to.

What happens if you lose mental capacity? What happens if you lose physical capacity but still have mental capacity?

In the situation where you lose mental capacity, for your Attorney to be able to invoke their rights under your Enduring Power of Attorney, you will need to be assessed by a medical practitioner as having lost mental capacity.  As we understand it, obtaining this assessment is not straightforward and can often take a few months.

If your Enduring Power of Attorney is “open” for property, then your Attorney will be able to continue to act for you while this assessment is taking place.  If your Enduring Power of Attorney is “closed” they will need to wait for the formal assessment to be completed.

This formal assessment will need to be completed before your Attorney can invoke their powers under your Enduring Power of Attorney for Personal Care and Welfare.

As mentioned above, if you lose physical capacity but still have mental capacity, your Attorney will only be able to use their powers if your Enduring Power of Attorney is “open”.

Has What if your Attorney lost mental capacity?

If your Attorney has lost mental capacity then they will no longer be able to act for you.  This is where it is a good idea to have a backup/successor Attorney already appointed, as they would then step into your previous Attorney’s shoes.  If you do not have a backup/successor Attorney appointed then as long as you still have mental capacity, you could sign new Enduring Powers of Attorney. 

If your Attorney loses mental capacity after you have lost mental capacity and there is no back up/successor Attorney appointed, then someone will need to apply to the Court to be appointed your Property Manager and/or Welfare Guardian to be able to make decisions for you.

What Form is your Enduring Power of Attorney on?

In 2007 the Protection of Personal and Property Rights Act was amended.  This amendment was to provide better protections for people setting up Enduring Powers of Attorney and to provide clearer guidelines regarding how an Attorney can act under an Enduring Power of Attorney.

This means that the previous one page Enduring Power of Attorney forms were updated to include more requirements, restrictions and powers.  The newer forms now provide for the Donor to give specific instructions regarding consulting on decisions as well as requiring Attorneys to provide information to other people such as other family members. 

If your Enduring Powers of Attorney was signed prior to 2007 it will still be valid, however you may wish to consider putting new ones in place if you would like to include further provisions and restrictions on your Attorneys. 

How do I change my Enduring Powers of Attorney?

Whilst signing a new Enduring Power of Attorney will revoke your previous ones, you will still need to notify your Attorney of the termination of your previous Enduring Powers of Attorney.  This will need to be done in writing.

As advised above, your new Enduring Powers of Attorney will not be valid until they are signed by all parties (including back up/successor Attorneys) and dated.  Please bear in mind that if you decide to appoint someone living overseas as an Attorney the original Enduring Power of Attorney form will need to be sent to them to physically sign and return. 

The changes in 2007 also brought in changes to the witnessing requirements to the Donor’s signature.  The Donor must now obtain independent legal advice from either a practising lawyer, a registered legal executive who meets the specific criteria, or authorised officer or employee of a trustee corporation, prior to signing the Enduring Power of Attorney, and that person must witness the Donor signing.   

What happens if I lose mental capacity before putting in place an Enduring Power of Attorney?

As previously mentioned, if you lose mental capacity without a valid Enduring Power of Attorney in place, then someone will need to apply to the Court to be appointed your Property Manager and your Welfare Guardian.  This is not a straightforward process, and that person will need to reapply every few years.

Please read our further articles on this topic:

What are the powers and restrictions on property managers appointed under a PPPR order   

What is the difference between a property manager and a welfare guardian  

helping a loved one who is losing capacity - what are your legal options 

What should you do now?

If any of the issues above have prompted you to revisit your Enduring Powers of Attorney, now is a good time to review them to ensure they remain fit for purpose. It is recommended that you seek advice from your legal advisor to ensure your documents still reflect your wishes and current circumstances.