1st Mar 2017
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Parents won’t have an enduring power of attorney
Author: Rod Cunich
Mature daughter speaking to her elderly mother about power of attorney

As Jane’s parents age, she thinks it’s a good idea for them to have an enduring power of attorney in place but they won’t hear of it. Legal expert Rod Cunich advises Jane on how to tackle the discussion.

Q. Jane

I would like my parents to have an enduring power of attorney in place but they simply dismiss the idea, saying everyone knows what they want to happen if they are incapacitated in any way. I have tried to tell them that this isn't enough – is there anything I can do to ensure we are covered legally should the worst happen?

A. Rod

First, let’s clarify the purpose of an enduring power of attorney (EPOA). It is a document by which a person (the principal) can authorise one or more people (the attorney/s) to make financial and legal decisions on the principal’s behalf.  It will continue to operate when the principal loses mental capacity.

An EPOA can commence at a time nominated by the principal.  For example, from the date the document is signed or only after the principal loses capacity.

So here is the response to your parents’ proposition: although you may know what they want to happen if they are incapacitated, in the absence of a valid EPOA you have no legal power or authority to implement their wishes. Transactions with third parties such as banks, council, service providers, insurance companies, retirement villages, nursing homes and Centrelink, to name just a few, simply can’t be undertaken on your parents’ behalf without an EPOA.

So why should they execute an EPOA now? The answer is simple – once they lose capacity it’s too late to execute an EPOA. And loss of capacity can occur unexpectedly at any time through accident or illness, such as a stroke.

What happens if there is no EPOA and they have lost capacity? You would have to apply to the relevant state tribunal to be appointed as their guardian, usually under the supervision of a statutory authority that has reporting requirements. This is a time-consuming and stressful exercise that can easily be avoided by executing an EPOA. In some states, financial guardians (even if a trusted family member) must pay a security bond as a condition of being appointed. At worst, a tribunal may appoint a stranger as guardian or a trustee company whose significant fees must be paid.   

Signing an EPOA is a no-brainer – but your parents must be cautious as EPOAs are often used by unscrupulous attorneys to feather their own nest. I’m not suggesting that you fall into this category but an attorney could use their power without consulting the principal – even if the principal still has capacity.

Therefore, those who execute an EPOA must ensure they select someone:

(a) they trust

(b) who understands their wishes

(c) who won’t mismanage or abuse their wealth.

With a few very limited exceptions, legally, only the appointed attorney can use their power – including the spending of money in accounts – for the benefit of the person who appoints them. 

So EPOAs are quite easy to misuse – sometimes fraudulently – but often, just ‘inadvertently’, and very hard to police. However, appointing a third party such as an accountant as the sole attorney or as a joint attorney with a family member can help hedge against misuse.

The other document that they should consider signing is the Appointment of Enduring Guardian which authorises a person to make decisions on their behalf; decisions concerning health and welfare matters in the event that they are unable to do so themselves. This document covers decisions such as where they live and what healthcare they receive. The document can also include directions about end-of-life decisions, often known as the Advance Healthcare Directives or Living Will provisions.  

Rod Cunich is a lawyer with over 30 year of experience who specialises in estate planning. If you have a question for Rod, simply email it to newsletters@yourlifechoices.com.au

Rodcunichlawyer.com.au

The information provided is general in nature. You should consult a qualified legal practioner before making any decisions.





    COMMENTS

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    KB
    6th Mar 2017
    10:43am
    Ab enduring power of attorney is essential and they should be the ones to implement this. If sat for example there u no joint account for the partner to withdraw money i f the other partner is ill then banks will not let you withdraw money. South Australia has toughened up the rules.
    Attila
    6th Mar 2017
    10:54am
    I had this power for my late mother when she was 88. She lived till a few days before turning 91. Prior to that I did not think it was needed. It is very stressful especially for an only child. But my friends have had more problems with their own siblings.
    If you think about it, we can all pass on at any age, be it 20, 45, 52 or 75. So putting it in place if the person is in good health I don't agree with.
    Cuddlycas
    10th Mar 2017
    1:26pm
    My brother and i experienced all sorts of problems because our 85 year old father refused to have an Enduring Power of Attorney. He then had a fall, became incapaciated and developed dementia. In order to manage his affairs we had to apply to VCAT to become Guardians. Due to this I have already completed paperwork for my own future and these are being held by my solicitor and not to be actioned until or where i lose capacity to look after myself. I am in my 60's.
    Nan Norma
    10th Mar 2017
    1:45pm
    Unfortunately I have seen this abused too often.
    Rosret
    10th Mar 2017
    3:44pm
    The most likely people in this world to steal or cause a person financial and emotional grief is a family member.
    The argument that you may lose your marbles is a relevant one at any age. No one has a crystal ball.
    It is so easy to chuck the parent in a retirement home or worse still a room out the back of the family home, spend their money and then never visit.
    Sorry - there needs to be a better plan.
    Having two signatures may help but with my parents the bank didn't even check as cheques were signed. It wasn't their money so they didn't care about the legal requirements whatsoever.
    Nan Norma
    10th Mar 2017
    4:14pm
    Rosret. so very true.
    cass
    10th Mar 2017
    2:35pm
    I was lead to belive that we cant have this in Queensland is this right had in nsw when i moved to Queensland and made a new will. The said it was not valid uner the Queensland law
    Rosret
    10th Mar 2017
    3:49pm
    I don't think that is right. You can have Power of Attorney and a Will that applies anywhere - especially in Australia. Contesting the Will will be under that State Law though.
    rtrish
    10th Mar 2017
    3:00pm
    Enduring Power of Attorney is an excellent idea. As my Dad became less able to handle his affairs, then was in hospital and aged care, we were so glad that the EPA was already in place. We had suggested it to him some years before and he set it up with his trusted solicitor. There were 2 people who were POA and we had to operate bank accounts etc jointly. Sometimes it was tricky, as we lived in separate states, also separate to the state Dad lived in, however we made it work and it was so handy sorting out his entrance to aged care and keeping the bills (house insurance, electricity etc) going OK.
    Nan Norma
    10th Mar 2017
    4:16pm
    If you can find a honest solicitor you are very lucky.


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