No Enduring Power of Attorney?
Posted: 26 February 2019
Most people are now aware of the importance of having an enduring power of attorney (EPA). If you are unable to make decisions for yourself at any stage (either temporarily or longer term) it is important there is someone in place to act on your behalf. What happens to you, and your family situation, if you have no EPA?
Ensuring you have EPAs (for property and for your health and welfare) is a very important part of keeping your personal affairs in order. An EPA can be used if you are out of the country for a long time and you need someone to keep an eye on your financial affairs, or if you become mentally incapacitated and cannot look after your property or yourself.
Mental incapacity can happen for a variety of reasons – a car crash or other accident, old age or a medical event. If anything like this happens and you can’t manage your own affairs, unless you have a signed EPA, there is no one with an automatic right to step in. Your spouse or partner may be able to deal with some of your jointly-owned assets but they are not authorised to sign on your behalf if you’re mentally incapacitated. If there is no EPA, then it is necessary to apply to the Family Court.
Family Court orders
The Family Court has power to make a number of orders under the Protection of Personal and Property Rights Act 1988. The two most important orders are the appointment of:
- A welfare guardian to look after the person’s personal care and welfare, and
- A manager or managers to take care of the person’s property – this includes everything that person owns (bank accounts, investments and so on).
Court process
With no EPA, if you need someone to manage your affairs, an application must be filed in the Family Court before an appointment is made. A doctor’s certificate is needed to prove you are mentally incapacitated. The court will appoint an independent lawyer to speak on your behalf – who will usually need to meet you. Other members of your family will usually need to be notified as they have a right to put their views before the court. After hearing from the appointed lawyer, and anyone else who has made their views known, the court will make a decision based on what it thinks is best for you.
Often the court process will only take two or three months. However, it can take longer, especially if some family members oppose the proposed appointment. Other issues can arise, for example, if the property manager also asks for permission to make a will on your behalf.
Review and reporting requirements
Court appointments do not last indefinitely, unlike EPAs which last until you pass away. The court will usually require the manager and welfare guardians to apply for a review of their appointment after three years. The manager or welfare guardians can be reappointed, but the court must be satisfied their appointment is still necessary and in your best interests. The entire court process, including appointment of an independent lawyer, has to be followed again.
Property managers also need to file a report every year stating the extent of the assets under administration. There is a specified form for this; the report is reviewed by Public Trust.
The appointment of a property manager or welfare guardian is not straightforward. There are ongoing reporting and review requirements which all add to the cost. Our advice is usually to avoid having to do this if at all possible.
How to avoid all this? Get an EPA
It’s much easier and more straightforward to ensure you have an EPA, and for you to review it every few years. For your family to go through the Family Court to appoint a property manager and/or welfare guardian is expensive and time-consuming.
Do the sensible thing and get your EPA organised soon.
1Section 55 Protection of Personal and Property Rights Act 1988 (PPPR Act)
2Managers must also file a report within three months after first being appointed and after their appointment ceases – s45 PPPR Act.
DISCLAIMER: All the information published in the Property eSpeaking, Commercial eSpeaking, Trust eSpeaking, Rural eSpeaking, and Fineprint newsletters is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in Property eSpeaking, Commercial eSpeaking, Trust eSpeaking, and Fineprint may be reproduced with prior approval from the editor and credit given to the source. Copyright, NZ LAW Limited, 2019. Editor: Adrienne Olsen. E-mail: [email protected]. Ph: 029 286 3650 or 04 496 5513.
