Article - Enduring Powers of Attorney – Significant Changes

Enduring Powers of Attorney involve an individual, ‘the donor’, placing trust in a person, ‘the attorney’, to act competently in the donor’s best interests. The donor of such a power who becomes mentally incapable is dependent on some other trusted person to make decisions for him or her. Sadly, this trust is sometimes abused, particularly by family members.

The Government realises the current legislation is inadequate and has enacted the Protection of Personal and Property Rights Amendment Act 2007 (“the Act”). The Act arises out of the Law Commission Paper “Misuse of Enduring Powers of Attorney”, received Royal Assent last year and comes into force on 26 September 2008.

The Act makes the interests of the donor paramount. Where the donor has lost capacity, and decision making is taken over by an attorney, the donor still has the right to be consulted about their views. The Act places an obligation on the attorney to encourage the donor to develop the donor’s competence to manage his or her own affairs in relation to his or her property.

New witnessing requirements
The Act introduces new witnessing requirements for all new Enduring Powers of Attorney. A lawyer, legal executive, or an officer of a Trustee Corporation must act as the witness. Legal executives are able to witness if they have at least 12 months experience, hold a current annual registration certificate issued
by the New Zealand Institute of Legal Executives, and are employed by and under the direction and supervision of a lawyer.

The witness must explain to the donor the effects and implications of the Enduring Power of Attorney and his or her rights, and certify in the prescribed form that this has been done. At the time of signing, the witness must certify that he or she has no reason to believe that the donor lacks mental capacity and that the witness is independent of the attorney.

New definition of mental capacity
A donor is deemed mentally incapable if he or she lacks the capacity to:
• make a decision about a matter relating to personal care and welfare
• to understand the nature of decisions about matters relating to his or her personal care and welfare
• to foresee the consequences of decisions about matters relating to his or her personal care and welfare, or
• communicate decisions about matters relating to his or her personal care and welfare.

A prescribed form has been issued for Health Practitioners to certify as to incapacity. The form must be used on all occasions when the donor’s capacity is in question.

Proper Records to be kept
The attorney must keep proper records of each financial transaction entered into by the attorney while the donor is mentally incapable.

Suspension
The Act allows the donor who has been, but is no longer, mentally incapable to suspend the attorney’s authority to act by giving written notice to the attorney. The suspension does not revoke the Enduring Power of Attorney and can be reviewed by a Court. However, an attorney whose authority is suspended cannot act unless a Health Practitioner has certified, or the Court has determined, that the donor is mentally incapable.

Easier access to Courts
A wider range of people can now apply to the Court regarding an attorney’s actions. Any of the following people may apply to the Court to review a decision:
• the donor
• a relative or attorney of the donor
• a social worker
• a medical practitioner
• a trustee corporation
• the principal manager of any place that provides hospital care, rest home care or residential disability care
• any welfare guardian who has been appointed for the donor
• a person authorised by a body or organisation contracted by the Government to provide Elder Abuse and Neglect Prevention Services
• any other person, with leave of the Court

In Conclusion
It is hoped the Act goes some way to limiting situations in which it might be possible for Enduring Powers of Attorney to be misused or abused.
Although compliance costs will inevitably be increased, this is considered a small price to pay to increase protection for a vulnerable donor.

Author: Legal News Letter 2008
Distributor: AnnanLaw - Lawyers Tauranga
For more information contact: AnnanLaw
Posted 21 November 2008