Enduring powers of attorney (EPA) are common documents. Many of us have one, are considering preparing one, or have been appointed to act as an attorney pursuant to one. Irrespective of your past experience of EPAs, it is worth revisiting the powers that can be granted to an attorney by an EPA and when those powers can be acted upon.
Types of matters
A principal (the personal who prepares the EPA) can appoint an attorney to act for them in relation to two types of matters:
(a) Personal and health matters; and
(b) Financial matters.
The principal can choose to appoint an attorney for personal health matters only, for financial matters only or for both personal health matters and financial matters.
If you have been appointed to act as an attorney, it is important to be certain of the matters for which you have been appointed to act. For example, acting in relation to a financial matter when you have only been appointed to act in relation to personal health matters, may mean that you are acting without authority. The consequences for acting without authority can be serious.
What are Personal Heatlh Matters?
The Powers of Attorney Act 1998 (Qld) (Act) defines personal matters to include health matters but not special personal matters or special health matters.
Personal and health matters that an attorney is permitted to make decisions about include where the principal lives, services provided to the principal, diet, dress and daily care of the principal and legal matters relating to the principal which are not financial or property matters.
An attorney is not permitted to make decisions about the following matters:
(a) “Special personal matters” which include making or revoking the principal’s will, making or revoking the principal’s EPA or advance health directive, voting on behalf of the principal or consenting to the marriage of the principal; and
(b) “Special health matters” which include removal of tissue from the principal for donation to someone else, sterilisation of the principal, termination of a pregnancy of the principal, participation of the principal in special medical research or experimental health care and prescribed special healthcare of the principal.
When does the power commence?
An attorney’s power to make personal health decisions on behalf of a principal will only commence when the principal no longer has capacity to make the decisions.
It is common to find that attorneys have begun making personal health decisions for a principal when the principal still has capacity to make the decisions. Attorneys are usually trying to be helpful, but strictly speaking, they may be doing so without authority because while a principal retains capacity, they must make their own personal health decisions.
Have any terms been set?
It is important to confirm whether the principal has recorded any terms in relation to personal health matters in the EPA.
Terms can be general or specific. For example, a principal might include a condition that they be cared for at home with the assistance of carers instead of residing in a care facility or that they are not to reside in a particular facility because it is too far away from their family etc. Any terms recorded by the principal should be observed by the attorney.
What are Financial Matters?
The Act defines financial matters and it is quite broad.
Financial matters include maintenance and accommodation expenses for the principal and the principal’s dependants, paying debts, recovering money owed to the principal, carrying on a trade or business of the principal, performing contracts entered into by the principal, paying rates, taxes insurance or other outgoings for the principal’s property, preserving and improving the principal’s estate, undertaking real estate transactions, a legal matter relating to the principal’s financial and property matters and dealing with the principal’s bank accounts.
When does the Power Commence?
The principal can nominate when an attorney’s power in relation to financial matters is to become operative. Contrary to personal health matters this power can start whilst the principal still has capacity.
Options for when an appointment will commence include:
(a) Immediately - this means that the attorney can make financial decisions on behalf of the principal even in circumstances where the principal has capacity to make financial decisions for themselves at the time;
(b) On a specific date or a specified duration;
(c) Upon them losing capacity - this means that the principal retains the ability to make their own financial decisions until such time as they lose capacity; and
(d) Another time specified by the principal - principals can be creative and set a different time for when the appointment is to become operative. For example, a principal might appoint a spouse to make financial decisions for them immediately, but for all other nominated attorneys, the ability to make financial decisions may only become operative on the principal’s loss of capacity.
It is essential for principals to be aware of the different options available to them regarding when power for financial matters should commence. Principals can be creative when setting these terms and implement a timing condition which best suits them and their circumstances.
Attorneys must be aware of when their appointment commences. Making decisions for a principal regarding financial matters when the power has not commenced means that the attorney is acting without authority. If this occurs and the principal suffers loss as a result, attorneys can be required to personally compensate the principal for any loss.
Key Points to Remember
It is surprisingly common for principals and attorney’s alike to be unfamiliar with the terms of the EPA in question. This can lead to the powers granted by an EPA being abused and attorney’s finding themselves in hot water if it is discovered they have been acting on behalf of a principal when they should not have been (whether this is deliberate or inadvertent).
Here are some key points for principals and attorneys to keep in mind regarding EPAs. These points have been collated based on our experience in this area and commons issue we see arise.
- (a) Think carefully about who to appoint as your attorney and be comfortable that the person will act in your best interests even when they are acting unsupervised.
- (b) Consider whether you would like to set any terms in your EPA, relating to either personal health matters or financial matters. When acting on your behalf, your attorney must have regard to these terms.
- (c) Properly understand when your attorney’s power will commence. This will reduce any likelihood of you allowing (or being persuaded to allow) your attorney to act on your behalf earlier than authorised.
- (d) Whilst you have capacity, changes can be made to the EPA. You should regularly review your EPA to ensure you remain comfortable with the attorney/s appointed, any terms set and the time at which your attorney may act on your behalf.
(e) Be familiar with the terms of the EPA so that you understand the scope of your power and when it begins. Acting outside the terms of an EPA can have very serious consequences.
(f) Just because the EPA appoints you to act as attorney immediately does not mean the principal must be excluded from the decision making process. Where possible, consult with the principal to obtain their view on the decision to be made. This reduces the likelihood of a dispute and the principal feeling “out of control” of their affairs.
(g) Your primary duty is to act the best interests of the principal. At times, circumstances may arise where a decision needs to be made and the course of action which is in the best interests of the principal is not immediately clear. In these circumstances, it is important to weigh up the risks of the matter, including both financial and non-financial risks (ie: conflict with family members) and in this context, consider what is best for the principal. If in doubt, often the best course is to obtain independent legal advice. This can assist to provide an objective approach to the issue and identify a way forward, whilst providing reassurance that you are complying with your obligations as attorney.
(h) If you are aware that there is a dispute about the EPA (ie: its validity or whether the appointment has commenced), the prudent course is to obtain independent legal advice and take no steps at all until you have obtained that advice and/or the dispute is resolved. Proceeding cautiously in these circumstances is wise and can limit exposure to personal liability for acting without authority.
Preparing an EPA or acting as an attorney can be difficult and on occasion, confusing. If you would like more detailed advice about preparing an EPA or specific advice about your role as an attorney, please contact the McInnes Wilson Lawyers Estate Law Team.