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When You Can't Manage Your Affairs

12 December 2011

It Could Happen to You…

Tragedy knows no bounds and can strike like lightning out of the blue. Matt and Julie had hunkered down and worked hard during some tough years but were now starting to enjoy the rewards - until Matt was seriously injured in a car crash only minutes from home. Matt survived but his serious head injuries meant that he would no longer be able to work on the farm or understand enough to manage his own affairs and sign legal documents.

Julie couldn’t manage the farm on her own and needed to sell it. To do this she had to apply to the Family Court for an order enabling her to make decisions on Matt’s behalf and sign legal documents for him. This was expensive and time-consuming and put Julie to additional stress that she didn’t need at this time.

 

Enduring Powers of Attorney

Matt and Julie’s situation could have been avoided if Matt had signed enduring powers of attorney. Enduring powers of attorney are made under the Protection of Personal and Property Rights Act 1988. These powers of attorney are called “enduring” because they do not become ineffective if the person signing them (called the “donor”) becomes mentally incapable. Before this Act was passed, if a person became mentally incapable any power of attorney the donor had signed could not be used.

Anyone going into a retirement village or residential care will be asked to make enduring powers of attorney.

 

Two Types of Enduring Powers of Attorney

There are two types of enduring power of attorney – one for property affairs and one for personal care and welfare affairs.

You can make an enduring power of attorney for property effective when you sign it, or state that it is only to be used if you become mentally incapable. An enduring power of attorney for care and welfare can only be used if you are mentally incapable.

For both types of enduring powers of attorney you can place restrictions and conditions on the attorney, you can require your attorney to consult with other people or provide other people with information about the attorney’s decisions.

 

Your Attorney

You can appoint more than one person to act as your enduring power of attorney for property. However, you can only appoint one person to act at a time as your enduring power of attorney for care and welfare. For both types you can appoint a successor attorney who can step in and act if the first person you appoint is unable to do so.

As they have significant control of your affairs, the person or persons you choose to act as your attorneys should be people whom you trust implicitly and will always act in your best interests. Your attorney should understand how you feel about these types of decisions, particularly in relation to care and welfare decisions.

 

What is Mental Incapacity?

You are presumed to be mentally capable until it is shown otherwise. Your attorney is not the person to decide if you are mentally incapable. The enduring powers of attorney can only be used if your attorney is able to produce a certificate from a health practitioner who is qualified to make this assessment. Whenever the enduring power of attorney makes a decision in relation to a significant care and welfare matter, he or she must obtain the certificate.

 

Signing and Acting on Enduring Powers of Attorney

You will need to see your lawyer, a registered legal executive or an authorised person from a trustee company to put enduring powers of attorney in place. The lawyer, registered legal executive or authorised person who witnesses your signature must be independent of your attorney and must sign a certificate that he or she has explained the enduring power of attorney to you.

Once the enduring powers of attorney have been signed, they should be kept in a safe place. The original document (or a copy certified as a true copy by someone authorised to do so – for example, a lawyer or Justice of the Peace) can be produced when the attorney needs to act on it.

 

It’s Like an Insurance Policy

The relatively modest cost of putting enduring powers of attorney in place is like paying your insurance premiums – it’s more likely than not you won’t make a claim on the policy, but if do make a claim you’re really glad you paid the premiums!

 

Please email me at barbara.mcdermott@nwm.co.nz with your ideas for future articles. Keep an eye out for next month's column, where I will discuss another relevant rural legal issue.


Barbara McDermott is a partner of Norris Ward McKinnon, specialising in commercial and rural law. With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.