What do general and enduring powers of attorney and, to a lesser extent, advance health directives do? These terms are often bandied about and too often the substitute decision making process and relevant documents are confused or not well understood.
Impaired decision-making is something that can impact on any person so it is important that we all have a general understanding about these documents because each document serves similar but different purposes and imposes similar but different obligations on the person/s appointed as substitute decision-maker. This article will focus on the similarities and differences between the documents and the types of decisions attorneys can make on behalf of a principal.
POAs and GPAs
A power of attorney (POA) or general power of attorney (GPA) allows a principal to appoint an attorney to make financial decisions on his, her or its behalf. The principal can be a person or a company. It is important to note, however, that a POA or GPA is not enduring in nature (ie: once the principal loses capacity to make decisions, then the POA or GPA ceases to have any effect).
Generally, a POA or GPA is prepared if a principal is temporarily going overseas and needs an attorney to sign a contract or to complete a transaction while he or she is outside the jurisdiction.
A POA or GPA can also be prepared where there is a sole director company and it is important to consider who will handle the company’s affairs once the sole director has lost capacity or is, for whatever reason, unable to act.
An enduring power of attorney (EPA) allows a principal to appoint attorneys to make personal/health and financial decisions on his or her behalf. The difference between a POA/GPA and an EPA is that an EPA continues to have effect even once a principal has lost capacity. As the document is enduring in nature, it is vital that a principal ensures he or she carefully considers who is appointed as an attorney. The main threshold in this respect is appointing someone they trust.
A principal is able to appoint different people for personal/health decisions and for financial decisions. Personal/health decisions can only be made on the principal's behalf once he or she has lost capacity. Financial decisions, on the other hand, can begin immediately, on a specified date or when the principal has lost capacity – this is a decision for the principal to make.
Personal/health matters include decisions such as:
- where the principal should live;
- his/her diet and dress; and
- whether to consent, refuse to consent or withdraw consent for particular types of health care.
Financial matters include decisions such as:
- buying/selling property;
- operating bank accounts; and
- what investments are appropriate for principal with regard to his/her financial circumstances and needs.
An advance health directive (AHD), similar to what the Americans call a “Living Will”, provides health care providers and personal/health attorneys with a principal’s wishes and directions in relation to future health care for various medical conditions. An AHD only comes into effect once the person making the document has lost capacity. Some of the wishes or directions a principal can include, but is not limited to:
- acceptance/refusal of blood transfusions;
- CPR; and
- artificial feeding and hydration.
People often mistakenly think that having a valid will is all that is required for an “estate plan”. While we agree having a will is important, it is equally important to have appropriate arrangements in place for substitute decision-making because, as indicated above, decisions are being made on behalf of a person that affects his/her lifestyle, health matters and financial position.
To ensure your clients' (or your) estate planning is appropriate and current, please feel free to take advantage of our complimentary 15 minute consultation where one of the representatives from our Estate Law team will be happy to conduct an Estate Planning Health Check (by phone or in person) on their existing estate planning arrangements.