Enduring Powers of Attorney

Dec. 13, 2021


An enduring power of attorney is a legal document in which a person (the ‘donor’) elects another person (the ‘attorney’) to manage their affairs and make decisions on their behalf.  An enduring power of attorney usually takes effect when the donor loses capacity.  

 

These are important documents which confer significant powers on the attorney.  For the protection of the donor, there are strict statutory provisions in the Protection of Personal and Property Rights Act 1988 which dictate how an enduring power is created, used, and terminated.  

 

There are two types of enduring power of attorney:

  1. Property; and

  2. Personal Care and Welfare.

 

 

Creation

 

A property enduring power of attorney may appoint one or multiple people to act as attorney.

 

A personal care and welfare enduring power of attorney can only appoint one attorney at a time.  

 

The same person can be appointed to exercise both powers, or different attorneys can be appointed for each.  Either document may appoint ‘successor' attorney/s and include people who must be consulted or informed about the decisions of the attorney.  The donor can also place restrictions or conditions on their attorneys’ ability to act. 

 

The Protection of Personal and Property Rights Act 1988 requires certain formalities to be complied with to create an enduring power of attorney. The donor’s signature must be witnessed by an ‘authorised witness’, being a lawyer or experienced legal executive, who certifies that they are independent and have advised the donor as to the effects and implications of the enduring power of attorney.  

 

 

Effect 

 

A property enduring power of attorney can either (i) take effect immediately and continue in effect if the donor becomes mentally incapable, or (ii) only take effect if the donor becomes mentally incapable.  

 

A personal care and welfare enduring power of attorney will only take effect if the donor becomes mentally incapable. 

 

Under section 93B of the Protection of Personal and Property Rights Act 1988, a person is presumed to be competent to manage their own property affairs and to have the capacity to understand decisions about their care, appreciate the consequences of those decisions, and communicate their decisions. 

 

A person will be deemed incapable of making such decisions if a relevant health practitioner has certified, or the court has determined, that the donor is mentally incapable.

 

 

Use 

 

Once an enduring power of attorney is activated, the attorney is subject to various obligations and responsibilities.

These include an obligation to consult with the donor where possible, keep records of transactions, act within the terms of the enduring power and in the donor’s best interests to the exclusion of all others in the exercise of their powers.   

 

A family member, medical practitioner, social worker, or other interested person can apply to the Family Court for review of the attorney’s decisions. The Family Court has a range of powers including to revoke the power of attorney, direct the attorney to act in a certain way, decide whether a donor is mentally incapable, and modify the scope of the power. 

 

 

Termination / Suspension
 

An enduring power can be revoked by a donor with capacity at any time by way of written notice to the attorney/s, or by the Family Court in certain circumstances such as where the attorney has not acted in the best interests of the donor. 

 

A donor who regains capacity can suspend an enduring power of attorney by way of written notice to the attorney.  The suspension will continue until the donor is declared mentally incapable again by way of a Court order or mental certificate.  

 

An enduring power of attorney will cease to have any effect after the death of the donor.  The donor’s assets will then be dealt with as directed by the executor named in the deceased’s will.  If they do not leave a Will, the Court may appoint an administrator to act. 

 

 

Conclusion
 

Choosing an attorney is a serious decision.  It is important to choose someone who you feel understands you and will make the right decisions for you.  The right person may change over time, so whenever you get your Will written or updated, we recommend that you also consider your enduring powers of attorney.  

 

Contact one of our experienced lawyers at trusts.estates@becker.co.nz if you would like to create or update your Will or enduring powers of attorney. 

 

Nina Becker 

Staff Solicitor


Disclaimer: The information contained in this article is general in nature and not tailored to your personal circumstances. It is only current as at the date posted and should not be relied upon as legal advice. If you require legal advice, please contact us for further assistance.