Enduring Powers of Attorney
1 September 2017
The Enduring Power of Attorney (EPA) regime was introduced by the Protection of Personal and Property Rights Act 1988 (the Act) and provided for powers of attorney that continue notwithstanding the loss of mental capacity of the person granting the power (the donor), whereas powers of attorney previously came to an end as they required the continued mental capacity of the donor.
In 2000 the Law Commission made recommendations to amend the Act largely to address areas of misuse of EPAs. Some key issues were abuse of the donor at the time of signing (including lack of explanation and duress), problems with the 'mentally incapable' test, neglect of the donor by the attorney, failure by the attorney to consult the donor, and dishonest misuse of EPAs.
The amendments came into force in 2008, but have created considerable issues, particularly around the witnessing requirements. The requirement for a witness to be independent of the attorney has created difficulties in common situations where two people wish to appoint each other as attorney, with a resulting increase in costs for clients. This specific problem was addressed by an interim amendment but other issues still required attention.
Following a Law Commission review, The Statutes Amendment Act 2016 provided for further amendments and introduced regulated forms for enduring powers of attorney.
Important aspects of these amendments include:
- The ability to revoke previous EPAs by a new EPA
- Simplified witnessing rules for mutual appointments, where there is no more than a negligible risk of a conflict of interest
- Simplified authorisation for attorney expenses
- Entrenching the attorney's duty to consult other attorneys under the same or other EPAs
- Outline of the requirements for explanations given to donors prior to signing
- Clarity around doctors' certifications of mental capacity.
A person may require two EPAs, as there are separate forms; one for personal care and welfare and one for property (which includes all assets, not only real estate). The main difference between the two is that an EPA for personal care and welfare comes into force only if the donor lacks mental capacity, whereas a donor can choose if an EPA for property comes into effect immediately and continues if the donor loses capacity or only on the loss of mental capacity.
EPAs remain a valuable precaution against the problems arising from dementia and other conditions that impact a person's ability to make decisions for themselves. In the absence of EPAs, an application to The Family Court for an order appointing a property manager and/or welfare guardian may be required.