A car fails to indicate a turn and abruptly swerves at a busy intersection. A cyclist, unable to react in time, crashes into the vehicle’s side, is thrown off their bike and hits their head hard against the road. The impact causes significant head trauma.
A family member begins forgetting names and misplacing items at 70. Their condition declines over the next few years, featuring frequent memory lapses and confusion. After comprehensive neurological evaluation, doctors diagnose them with Alzheimer’s disease.
Loss of mental capacity can occur at any time. An accident, a temporary illness or a permanent disability can strike you at any time without warning.
An Enduring Power of Attorney (EPOA) is an important legal document. It allows you as the “principal” to appoint an “attorney”, that is, someone who can step in and make financial and legal decisions for you when you cannot make them for yourself.
The term “enduring” is crucial, as it means that the power granted to the Attorney continues even if you were to lose mental capacity.
Your capacity is your ability to:
Understand the decision you are making;
Consider your options;
Weigh up the consequences of your decisions;
Understand how consequences affect you and others; and
Communicate your decision.
Your capacity can be impacted or lost due to health issues or sudden accidents. An EPOA is designed to provide individuals with peace of mind and added security when it comes to managing their financial and legal affairs. By assigning a trusted person the authority to make decisions on your behalf, an EPOA should protect your interests even if you become incapable of making these decisions yourself.
Attorneys in NSW can be appointed to make the following kinds of decisions:
Legal – making investments and selling or buying property;
Financial – such as paying bills and other expenses.
Multiple Attorneys can be appointed to make decisions together or to make different decisions.
It is important to note that an EPOA specifically addresses financial and legal matters. They do not cover health or lifestyle decisions. A separate document, an Appointment of Enduring Guardian, is required for these.
Duties of an Enduring Power Of Attorney
An Attorney under an Enduring Power of Attorney (EPOA) has several key responsibilities. They are appointed to handle your legal and financial affairs, and in doing so, they must comply with the following:
They must act in your best interest and avoid any conflict of interest.
Unless expressly authorised, they cannot gain a benefit from being an attorney.
They must keep their own property separate from yours.
They must maintain accurate records of all transactions related to the principal’s property and finances.
If applicable, decisions must also be made in line with the EPOA’s specified terms, conditions and limitations. When in doubt about their duties and obligations, the Attorney should always seek legal advice.
Does an Enduring Power of Attorney have to be registered?
In New South Wales, registration of an EPOA is not mandatory. However, if the Attorney needs to buy or sell real estate on behalf of the Principal or otherwise deal with their real property, the EPOA must be registered with the NSW Land Registry Services.
Is an Enduring Power Of Attorney valid after death?
No, an EPOA automatically ends on the death of the Principal and can no longer be validly used by the Attorney.
If the Attorney continues to rely upon the Power of Attorney to access the Principal’s bank accounts or assets, or if the Attorney signs any legal documents on behalf of the Principal after their death, then the Attorney could expose themselves to legal claims that they have acted inappropriately and without proper authorisation.
What happens if an Enduring Power of Attorney is misused?
Despite the responsibilities and duties held by Attorneys an EPOA can be misused.
There are increasingly issues of elder abuse in the community, where Attorneys have abused their power by accessing the principal’s bank accounts and paying for their own personal expenses and/or making large gifts of the principal’s money to themselves.
It is important that you trust the person or persons you are appointing as your attorney, and you might wish to consider having more than one person appointed to provide an additional level of security. If you suspect that an attorney is taking advantage or misusing their power, then it may be appropriate to approach the Guardianship Division of the NSW Civil & Administrative Tribunal, who have the authority to review existing power of attorney arrangements.
At Turnbull Hill Lawyers, we have a team of trusted estate planning experts who can provide you with advice and representation concerning Enduring Powers of Attorney and how they can be used. Please contact us today.