Why Wills Aren’t Enough: Planning for Incapacity
Let’s say you have taken the time recently to sign a Will with your lawyer. You tuck it away in a drawer and know that when you die, your assets will be distributed and dealt with in accordance with your wishes. It is an important and essential part of your asset planning.
But what happens if you get into a car accident or develop dementia? You are still living, but you no longer have the capacity to make decisions for yourself. Who will look after your assets then?
A Will does not take effect until you die, so if you are still living but not able to make decisions for yourself, you need Enduring Powers of Attorney.
What is an Enduring Power of Attorney?
An Enduring Power of Attorney (EPA) is a legal document that sets out who can take care of your personal welfare and property affairs if you are still living but are no longer able to do it yourself. The person you appoint is called your attorney, and your attorney must always act in your best interests.
There are two types of EPAs:
Property Enduring Power of Attorney
A property EPA gives your attorney the power to look after your money and property (e.g. access bank accounts, pay your bills, manage any residential property) no matter the value of the assets. A property EPA can take effect while you are still mentally capable (e.g. if you were physically incapacitated or stuck overseas and need assistance with your finances) or only if you are assessed as mentally incapable by your GP and unable to make these decisions for yourself.
Personal Care and Welfare Enduring Power of Attorney
A personal care and welfare EPA gives your attorney the power to make decisions about your health and welfare (e.g. medical treatments and living situation) only if you are assessed as mentally incapable by your GP and unable to make these decisions for yourself.
You can choose to appoint different people for each EPA or the same person for both.
What will happen if I don’t have Enduring Powers of Attorney?
Unless you have EPAs, there is no one with an automatic right to step in and manage your affairs, meaning an application to the Family Court is necessary to appoint a Welfare Guardian and/or a Property Manager. This can be a time-consuming and expensive process, and the Court may not appoint the person you would have chosen.
Why Set Up an EPA?
- To give you peace of mind. Know that your affairs will be managed by someone you trust
- To avoid delays. Without an EPA, no one can automatically act for you
- To make your preferences known. You can include guidance for your appointed attorney
Examples of when to use
EPAs aren’t just for older people — they’re a smart safeguard for anyone, at any stage of life.
Sophie, 35, was in a serious car accident while travelling overseas and was unconscious for several weeks. With an EPA for personal care and welfare, her father was legally able to liaise with doctors, make medical decisions on her behalf, and arrange for her care and rehabilitation once she returned to New Zealand.
Harold, 72, developed dementia and was no longer able to make safe decisions about his finances or care. Because he had both types of EPA in place, his daughter was able to pay his bills and manage his property for him and choose a care home that supported his wellbeing. Having EPAs meant Harold’s wishes were followed, and his family avoided the stress and cost of going through the Family Court.
Expert advice for your EPAs
While preparing EPAs may seem like a daunting task, in the long run, it is much simpler and straightforward for you and your family to take the time to ensure you have EPAs in place.
If you would like to speak with us about preparing EPAs or updating your current EPAs, please contact our team.