An elderly lady had owned and lived in her home for many years, since her husband passed away.  Over time she had slowly started showing signs of dementia, doing things like forgetting to lock the door or turn stove elements off.

Her children decided it would be a good idea for her to move in with one of them and for her house to be sold. They went to a lawyer to discuss selling the property.

They were surprised to find that because of their mother’s lack of mental capacity, she couldn’t sign an Agreement to sell the property.  Her children thought they could sign on her behalf automatically, which is not the case.  She had not appointed anyone as her Power of Attorney, so they did not have the right to sign on her behalf.

Unfortunately the above scenario is not uncommon.

Nor are they limited to the elderly, as people at any age are unfortunately involved in accidents which affect their mental capacity, leaving no one to make decisions on their behalf.

What is an Enduring Power of Attorney?

Enduring Powers of Attorney (“EPOAs”) are documents whereby you can appoint someone to make decisions on your behalf if you are unable (or unavailable) to do so yourself.

There are 2 types of EPOA:

  1. In relation to your Property: This authorises your attorney to act in respect of all of your property affairs, but can be limited to only specific property if appropriate.  “Property” means everything you own, i.e. your house, investments, bank accounts, personal belongings etc. You can choose whether you want this type of EPOA to come into effect immediately, or only if you become mentally incapable.
  2. In relation to your Personal Care and Welfare (medical matters): This enables an attorney to make medical and other decisions about your care and welfare (e.g. medical, moving into an aged care facility).  This type of EPOA only takes effect if you become mentally incapable.

Many rest homes require EPOA’s to be in place before they will admit a resident.

EPOA’s need to be made through a lawyer as there are strict rules around them.

What happens if I don’t make an Enduring Power of Attorney before I am deemed mentally incapable?

In the case above, without an EPOA in place, the only way that the children could be appointed to act on her behalf is through the process of applying to the Court to be appointed her Property Manager or Welfare Guardian, which is time consuming and much more expensive than preparing an Enduring Power of Attorney.

Can’t my partner sign things on my behalf?

It is not uncommon for people to assume that their partners can sign things on their behalf, but this is not generally the case.

Your partner will generally be able to sign in relation to jointly owned property (depending on the type of property), but will not be able to deal with any accounts, policies or possessions if they are in your sole name.

When should I consider creating an EPOA or reviewing my EPOA if I have one?

Every adult should have Enduring Powers of Attorney, as accidents affecting mental capacity can happen to anyone at any time.

However, here are some key events in your life that should cause you to particularly consider an EPOA, or if you already have one, to update it:

  • Getting married, separated or divorced
  • Entering into or ending a de facto relationship
  • Travelling overseas
  • Buying a house
  • If you are experiencing health concerns or failing health
  • If it is possible that you may be moved into an aged care facility in the near future

Your lawyer will be able to advise you what is best for your situation.