Skip to main content

Legal or mental incapacity is very real and can happen to anyone

We often come across situations where people have wills in place which deal with distribution of their assets to their loved ones.

More often than not we encounter situations where individuals have not put in place enduring powers of attorney (EPA) for their assets or personal care and welfare and the nightmare associated with that.

Whilst everyone seems to have a pretty good idea how they want their assets distributed upon death, people do not tend to think about what will happen and how they will be taken care of should they become incapacitated.

Legal or mental incapacity is very real and can happen to anyone, either through an accident, injury, medical event i.e. having a stroke, or age-related diseases. Once an individual becomes incapacitated, they can no longer look after themselves, their assets or appointing someone to care for them.

The question is what can be done in advance to ensure that assets and health and welfare are taken care of?

One should consider granting an enduring power of attorney (EPA) to another person. There are two types of EPA’s:

  • For property – it gives another person the power to look after and make important decisions about one’s property, money and other assets;
  • For personal care and welfare – it gives another person the power to make decisions about one’s health and welfare.

How does an Enduring Power of Attorney (EPA) work?

EPA’s, unlike the ordinary power of attorney, remains valid even when the donor becomes mentally incapable. When granting an EPA to another person it is important to consider carefully as to whom the power should be granted.

The danger often lies in naming one single person (generally a close family member) as the attorney, who may with best intentions at heart, end up doing what is wrong. It may also be prudent to name more than one person to ensure that the right outcome is achieved.

The legislation also enables an individual to name a substitute or series of substitute attorneys who can take over if the first attorney has for example passed away or is unwilling or unable to act. Naming substitutes avoids situations where the initial EPA is ineffective because the named attorney has passed away, is himself incapable, unable or unwilling to act.

It is also prudent to review any existing EPA’s on a regular basis to ensure that the right person and substitutes are named. Reviewing these documents is important as it gives comfort that the EPA’s will not be invalidated if for example the named attorney has passed away, is incapacitated or lives outside of New Zealand, and no substitute attorney has been named.

Article by Martina Evans, the tax expert from Roberts & Associates.

Please give us a call if you are interested in setting up an enduring power of attorney, we can recommend a good Lawyer who is experienced in these matters and is also cost-effective.
Get Advice