What is an Enduring Power of Attorney?
An Enduring Power of Attorney is a legal document that gives a person authority to sign legal documents on your behalf. The Enduring Power of Attorney is signed before a witness and can give the power to deal with bank accounts, investments, cars, houses, etc. It can give another person power to sign any legal document which you could legally sign. The document is called “enduring” since it still has legal effect if you lose your mental capacity and are unable to care for your own financial affairs.
In the Enduring Power of Attorney documents you can specify the powers and direction you give to your Attorney. For example, you can state that you want to live in your house as long as possible and be provided with home care but that if two medical doctors deem it advisable that you not live in your home, then the Attorney will have power to sell the house. You could also put in powers to continue giving Christmas or Birthday gifts to grandchildren.
Why should you sign an Enduring Power of Attorney?
If you became mentally incapacitated and you did not sign an Enduring Power of Attorney, your nearest relatives would have to bring a Court Application to be appointed as your Trustee. No one would be able to deal with your financial affairs, such as writing cheques on your behalf or selling your house, until they obtained a Court Order.
In cases like these the Court Order will appoint a Trustee who will have to file accounts with the Court and obtain approval once every 2 to 3 years. This process is expensive since it involves retaining a lawyer and an accountant to prepare the accounting records. This procedure, however, does provide considerable safeguards in ensuring that your property will used for your exclusive benefit.
If you want to avoid the expenses of a court order and have chosen a trusted family member or advisor who can take care of your financial affairs, you should sign an Enduring Power of Attorney.
When does an Enduring Power of Attorney come into effect?
Typically, a person will state that the Enduring Power of Attorney will take effect only if they become mentally incapacitated, a condition which must be verified by two medical doctors. An Enduring Power of Attorney can also take immediate effect and continue if you become mentally incapacitated. An Enduring Power of Attorney can be changed or revoked anytime you wish if you maintain your metal capacity, but it cannot be changed if you have lost your mental capacity.
Who should I choose as my “Attorney”?
The Attorney is the person (or persons) whom you choose to handle your financial affairs. This person is most often a spouse or close family member who knows your wishes and whom you trust to make financial decisions you would have made if you had maintained your mental capacity. You can choose more than one person or a corporate Trustee to act as Attorney, and if the first chosen Attorney is unwilling or unable to act, you can choose an alternate.
Who should prepare the Enduring Power of Attorney?
Many precedent Enduring Power of Attorneys are available at stationary stores and they are legally valid if signed in front of a witness. However, this is an important document in your estate planning and it should be carefully drafted. A lawyer will guarantee that the document is drafted properly and that your wishes will be carried out. Since it is important to be fully aware of the legal effect of an Enduring Power of Attorney, your lawyer will take care to give you proper advice and will record that you fully understood the Enduring Power of Attorney when you signed it.