4 reasons why you should have an enduring power of attorney
Introduction – What is an enduring power of attorney?
An enduring power of attorney is a legal document that allows you to appoint a trusted person with the ability to make decisions for you for personal, health and financial matters in the event that you lose the capacity to make decisions for yourself. Read more about what an enduring power of attorney is in this Information Sheet.
In this information sheet, our future planning lawyers look at 4 reasons why you should have an enduring power of attorney.
Reason 1: Why you should have an EPA – If you have children.
Typically, a parent has the legal authority to make decisions for their children. However, if you are incapacitated then it is important that someone else have legal authority to act on your behalf for your children.
Such decisions could include arrangements and decisions with schools and medical providers for your children, day to day care of your children and other such matters.
Most people consider appointing a guardian under a Will to look after their children but few consider the very important step of appointing a person to look after their children while they are still alive but are incapacitated.
Case study:
- In 2013, Carly was a single parent with two children.
- She was in a car accident and was in a coma for four weeks. At the time she went into the coma, no-one knew how long it would go on for.
- During that time, her ex-partner attempted to regain custody of the two children on the basis that Carly was unable to care for the children and no one else had legal ability to do so. Additionally, the school required documents for school trips to be signed but no person had legal authority to sign the documents and the children were unable to go on the trips.
- If Carly had an enduring power of attorney, this could have simplified quite a number of issues.
Reason 2: Why you should have an Enduring Power of Attorney – You are operating a small business as a sole trader.
If you operate a small business as a small trader and you become incapacitated, what will happen? Is someone authorised to make payments on your behalf with the bank? Is someone able to sign contracts on your behalf? Will employees continue to be paid?
A simple solution is to have a power of attorney document which allows a trust person to act for you in these matters if you are incapacitated.
Note – if you operate a business through a company or trust or other type of legal structure then you may need a different type of power of attorney.
Case study:
- In 2014, Carly received a payout for her road vehicle accident in 2013 so she decided to establish and open her own clothing shop.
- However, in early 2015, Carly caught influenza A and was again incapacitated for nearly 2 months on drips and again in a coma.
- During that time, no one had authority to access the bank accounts for the shops, pay suppliers, pay employees or other accounts, sign contracts with the new employees and so on. The business shut down within 2 weeks of Carly falling ill and when Carly finally recovered, it was to a business that had been closed for two months and a large number of unpaid accounts.
- If Carly had an enduring power of attorney, this could have simplified quite a number of issues.
Reason 3: Why you should have an EPA – Continued payment of your expenses and access to your accounts.
If you are incapacitated, family and friends may well step in to help support you. However, no matter how well meaning they are, a bank will not simply give them access to your bank accounts. This may mean that any medical expenses incurred while you are incapacitated, debts that you owe and so on may continue to be unpaid while you are incapacitated. Perhaps worse, family and friends may need to incur those expenses personally to ensure that you are properly cared for – this may be an onerous burden for some people.
Accordingly, it is a good idea to have a trust person appointed as a attorney to be able to make decisions for you if you are incapacitated.
Case study:
- In 2016, Carly was still trading her shop but she had outlaid a large amount of cash to pay down accounts and recommence trading the business. She was very cash poor.
- At one time, Carly noticed that four of the bulbs in the ceiling needed replacing. As the ceilings were 18 foot ceilings, Carly usually arranged an electrician to do the work but, as she was cash poor, she decided to do it herself. Carly replaced 3 of the bulbs with ease but when she climbed the ladder for the fourth time, she slipped and fell from the top of the ladder.
- Carly was rushed to the hospital and urgently required a life saving surgery that would cost $10,000.00 (the exact amount left in Carly’s bank account – not that anyone knew that). However, as no-one had an enduring power of attorney for Carly, her parents needed to put the entire account on two credit cards costing them a huge amount in interest and fees.
- If Carly had an enduring power of attorney, this could have simplified quite a number of issues as her parents would have access to accounts and so on.
Reason 4: Why you should have an EPA – Making health decisions for you.
Your personal circumstances are unique. While one person might be quite happy for their [spouse/parent/sibling/child] to make decisions for them, another person may not be – for many varied reasons! If you are incapacitated, you should have the peace of mind to ensure that only the people you want to be making decisions for you, are appointed to make those decisions.
Some people choose to appoint a person because they have had long discussions with them about what their desires are in medical circumstances. Some people prefer a certain (difficult) decision to be made in certain circumstances and know that their family wouldn’t be able to make the decision, so they appoint the person who they know will make the decision.
Case study:
- The life saving surgery for Carly in 2016 didn’t go so well and the family were gathered to decide whether Carly received a further surgery which could improve her chances of survival but leave her with a impairment.
- There were many arguments including one where Carly’s brother Ben said that Carly told him that she would never want a surgery like it. Unfortunately, Ben was overruled and the surgery took place.
- Ultimately, it was revealed that Carly would have survived without the surgery and she lived anyway.
- If Carly had an enduring power of attorney, things may have been quite different.
Who can be your power of attorney? How do you choose a power of attorney?
All those questions and more are answered in our next Information Sheet.