Enduring Powers of Attorney: What’s new?

Elder law | Print Article

Statutes Amendment Act 2016

The Statutes Amendment Act 2016 amending the Protection of Personal and Property Rights Act 1988 (‘PPPR Act’) received Royal Assent on 16 December 2016. The amendments to the PPPR Act will come into force 90 days following Royal Assent, on 16 March 2017.

The Protection of Personal and Property Rights (Enduring Powers of Attorney Forms and Prescribed Information) Amendment Regulations (the ‘Regulations’) will be available before 16 March. The Regulations will include new plain language Enduring Power of Attorney (‘EPA’) forms and a plain language explanation of the effects and implications of entering into an EPA for donors and attorneys.

While the EPAs already in place remain valid, from 16 March the new EPA forms contained in the Regulations must be used.

Importance and types of EPAs

EPAs are instruments of great importance. They are legal documents by which you, as ‘donor’, appoint a person or several persons, called ‘attorney(s)’, who can take care of your personal or financial matters if you can’t.

Research has shown that only 80% of New Zealanders have heard of an EPA and only 15% of those who knew about EPAs have one.

Everyone 18 or older should establish an EPA for both their property and their welfare. People tend to think only the elderly are likely to need someone to manage their affairs but anyone can become mentally incapable at any age or may just need someone to manage their affairs for different reasons. An accident or illness may be the prompt for needing an EPA.

There are two types of EPAs:

  1. EPA in relation to Property – by which you authorise a person or several persons to act on your behalf in relation to your property affairs. It can be activated either upon signing or only if you lose your mental capacity. They are often used by elderly people to empower their relatives or friends to act in their stead. EPAs can also aid someone who is abroad or who does not reside in New Zealand but who has affairs in New Zealand that need to be managed. You can appoint one or more attorneys.
  2. EPA in relation to Personal Care and Welfare – by which you authorise a person to act on your behalf in relation to health and associated care issues. It comes into effect only when a relevant health practitioner certifies or the Family Court determines you have become mentally incapable. You can only appoint a single attorney.

Upcoming changes to EPAs

The changes can be found in Part 23 of the Statutes Amendment Act 2016 and are as follows:

Less restrictive requirements for mutual appointments

There will be less restrictive requirements for mutual appointments (e.g. a married couple or partners appointing each other). The new provisions make it clear now that one practitioner can witness the signatures of two donors appointing each other, as long as the practitioner witnessing is satisfied that there is no more than a negligible risk of a conflict of interest. This amendment should help to reduce the cost and complexity of establishing EPAs.

Witness may use standard explanation

A form of standard explanation for the purpose of explaining the effects and implications of an EPA to a donor will be contained in the Regulations. The donor’s witness may use the standard explanation prescribed by the Regulations to explain the effects and implications of the EPA either by giving a copy of the form to the donor or by giving a verbal explanation to the donor following the instructions in the form.

Additional witness certificate requirements

Additional witness certificate requirements are provided, which add a higher degree of responsibility on the practitioner witnessing the donor’s signature. The witness must believe on reasonable grounds that the donor understands the nature of the EPA, the potential risks and consequences of the EPA and is not acting under undue pressure or duress.

Optional provision for revocation of all previous EPAs

The new EPA forms give the donor the option to tick the provision regarding revocation of all previous EPAs. However, if both EPAs are of the same kind (i.e. either property or welfare or both) they both continue to have effect until notice of revocation is given.

The notice of revocation of the EPA must be given by sending a copy of the later EPA to the attorney(s) appointed under the earlier EPA. The notice may be given by a person other than the donor (e.g. donor’s lawyer or one of the attorneys appointed under the later EPA), including after the donor becomes mentally incapable. This provision is to help donors who want to avoid family difficulties or who don’t want to upset their previous lawyer.

Revocation of an attorney

A donor will be able to revoke an attorney’s appointment without revoking the EPA if a successor attorney is appointed.

If an EPA appoints more than one attorney with joint or joint and several authority, the donor may revoke the appointment of an attorney or of the attorneys by written notice. The EPA will only cease to have effect when the last remaining attorney’s appointment is revoked by the donor or otherwise ceases to have effect (e.g. in case of death, bankruptcy, mental incapacity of the remaining attorney).

Attorney’s duty to consult

The new EPAs expand the situations in which an attorney must consult. Apart from consulting with the donor and any person specified in the EPA, consultation will now be required with any other attorney appointed by the donor including attorneys appointed under another EPA. This obligation does not include consultation with a successor attorney whose appointment has not taken effect.

Medical certificates of incapacity no longer in prescribed form

Medical certificates of incapacity need no longer be in prescribed form. They must still contain however the prescribed information which will be contained in the Regulations.

The new EPA forms will no longer contain the option for the donor to select the kind of health practitioner they want to undertake the assessment of their mental capacity. Medical certificates will now be primarily completed by the GPs.

The new EPA forms

From 16 March 2017, the old forms cannot be used to create valid new EPAs.

The new EPA forms will be available on the websites of the Ministry of Social Development and of the Ministry of Justice for downloading.

Although the forms will be available to the general public and although a donor is not legally required to have a lawyer, the old rules regarding witnessing will still apply. A donor’s signature to the EPA must be witnessed by either a solicitor, a registered legal executive, or a representative from a trustee corporation who has explained the effects and implications of an EPA.

There are a number of advantages to being fully and independently advised by a solicitor. A solicitor can advise a donor about what terms they might want to include in the EPA after careful consideration of the donor’s circumstances, can ensure that the EPA properly expresses a donor’s wishes and can explain to a donor the legal effect and consequences of the EPA.

Find a Lawlink Elder Law specialist now »