Estate Planning is about more than just making a Will. Where a Will plans for the transference of your assets upon your death, Enduring Power of Attorney (EPOA) and Appointment of Enduring Guardian (AEG) documents plan for incapacity in NSW.
These documents provide peace of mind for you and your loved ones. It might help to think of it a bit like an insurance policy – hopefully you will never need them, but if you do, you (and your loved ones) will be very relieved that you have them in place.
What is an Enduring Power of Attorney?
An EPOA is a very powerful legal document that appoints a person (or persons) (attorney) to make legal and financial decisions on your behalf.
What decisions can my attorney make on my behalf?
Your attorney can make almost all legal and financial decisions on your behalf that ordinarily only you would be able to make. Your attorney cannot vote for you or change your Will, but they can do almost everything else. For example, operate your bank accounts, sell your house, sign contacts on your behalf and so on.
Who should I appoint as my attorney/s?
You can appoint any adult person who is willing to take on this role for you (e.g spouse, adult children, trusted friend or family member). You can appoint more than one person and have them act jointly, or jointly and severally and it is recommended that you have at least one substitute person appointed.
Most importantly, your attorney should be someone that you trust implicitly to look after your best interests because there is no automatic independent oversight of EPOAs in NSW.
Can my attorney do whatever they want with my money and property?
Absolutely not! In accepting their appointment your attorney takes on the highest ‘fiduciary duty’. This means that that must always act in your best interests, they must also keep their own money and property separate from yours, they must keep reasonable accounts and records of anything they do with your money and property, they cannot gain any benefit from being your attorney and they must act honestly in all matters concerning your legal and financial affairs. If your attorney breaches this duty, they face serious criminal and civil penalties.
If someone believes that your attorney is not fulfilling this duty, they can make an application to the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) or Supreme Court of NSW (Supreme Court) to have the role reviewed. The NCAT or the Supreme Court can effectively audit your attorney’s use of the EPOA and revoke or amend it as required.
When does the EPOA power commence?
With an EPOA, you can decide to have the document come into effect straight away (once your attorney has accepted their appointment), when your attorney considers you are in need of a substitute decision maker, or only if a doctor considers that you are unable to manage your own affairs and provides a document to this effect.
Frequently Asked Questions
What is incapacity?
We often think about incapacity in the context of old age dementia or Alzheimer’s disease, but legal incapacity can occur for a wide range of reasons that have nothing at all to do with age. Incapacity can occur suddenly and without warning, for example, as a result of acute illness, acquired brain injury from an accident, mental illness and so on. Capacity can also be fluid, meaning that you may lack capacity for a period of time (e.g if you were in a coma) and then re-gain capacity. If you lack capacity for any reason, at any point in time, you may need a substitute decision maker to step in and make important decisions on your behalf during this time.
Doesn’t my Next of Kin (NOK) just have this power?
No. Your NOK does not have the same substitute decision-making powers that you appoint under an EPOA. For example, your NOK cannot legally sign a contract for sale of property on your behalf, even if you own the property jointly - you would need an EPOA for this.
What happens if I don’t have this document in place and I need it?
If you don’t have a valid EPOA document in place and you lose capacity, an application will need to be made to NCAT or the Supreme Court to apply for a Financial Management Order to give someone the legal authority to make these decisions for you. Any person concerned about your well-being can make this application and they can also be made by the hospital. NSW Trustee and Guardian (NSW TAG) are always part of these proceedings and if the Tribunal Member of Judge finds (based on the evidence) that there is no one suitable, or if there is a dispute in the family, NSW TAG are often appointed into these roles. This means that the person/s you trust and would want in this role will not necessarily be appointed. It can also be a very stressful process for you and your loved ones if an urgent application is required.
Can I change my mind?
Yes. You can revoke your EPOA at any time as long as you still have capacity. If you have lost capacity and the document requires revoking or amending, an application must be made to NCAT or the Supreme Court.
When does an EPOA end?
EPOA documents become invalid when you pass away, and the executor of your Will then becomes your personal legal representative. Your attorneys cannot legally access your bank accounts or assets after your death.
Do I really need both EPOA and AEG?
Yes. To properly plan for incapacity you should have both an EPOA and AEG in place because they each have completely different functionalities that dovetail together to make sure that you have legally appointed substitute decision makers who can look after your best interests if you are unable to do so yourself.
Click here to learn more about Appointment of Enduring Guardian's (AEG):
This blog is for information purposes only and should not be relied upon as legal advice. You should obtain legal advice for your specific circumstances. ©Avid Law Pty Ltd. Liability limited by a Scheme approved under Professional Standards Legislation.