An enduring power of attorney (EPOA) is a legal document that thousands of Australians have used to allow someone else to make decisions about their health and finances, if they are unable to do so.
You may have created an EPOA for yourself, or you may have been appointed as someone else’s attorney. (The person who makes an EPOA is known as the principal, while the attorney – not in the sense of an American lawyer – is the person appointed as the principal’s decision-maker, either with immediate effect or at some time in the future.)
But even people who already have an EPOA or are an attorney for a loved one are sometimes unaware of some of the implications of the document and the obligations it creates. So, here are six things you should know about EPOA documents.
An EPOA isn’t – and shouldn’t be – a one-size-fits-all document. Every individual will have different needs and circumstances and their EPOA should reflect this.
There are sections of an EPOA that can be used to set specific terms or rules. For example, you may want to request that your attorney manages your investments in line with your financial planner’s advice, or stipulate that you would like to move to an area near your grandchildren if you sell your house and purchase a new one.
While an EPOA does give a significant amount of power to the attorney, it should not be seen as a license to control all of the principal’s decisions. The principal should be kept updated about all decisions that have been made by the attorney and encouraged to maintain control over as many areas of their life as possible.
The attorney can be appointed to make financial decisions or personal and medical decisions or all of these. For example, if the principal remains able to make medical decisions, their attorney can be restricted to only making financial decisions, allowing the principal to retain independence in other areas of their life. Guidance from the principal’s doctor is important here to understand which types of decisions they can make.
Unfortunately, the topic of finances can easily spark conflict and disagreements within families. To follow the rules and to reduce the chances of conflict and easily resolve any misunderstandings, attorneys should always keep an accurate, up-to-date record of all decisions and transactions that they make on behalf of the principal. Suspicions often arise if an attorney seems defensive or as though they are hiding something, so keep communication lines open between family if possible.
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As an attorney, you may also want to consider seeking advice from an unbiased third party, such as a lawyer, accountant or financial planner, if you are struggling to make a decision on behalf of the principal on a particular topic or area.
Taking on the role of an attorney can be a huge responsibility for one person to shoulder. If you have been nominated as an attorney, consider accessing information through non-profit organisations like ADA Australia or the public trustee in your state or territory. They can help you better understand the responsibilities of your role and ensure that you are acting appropriately.
It’s also worth keeping in mind that EPOA documents can allow a principal to nominate multiple people to act as an attorney. If you would like to share the responsibilities set out in your EPOA, consider nominating two people (e.g. two siblings) as joint attorneys.
Ultimately, the role of an attorney is to make the same decisions that the person would make if they had decision-making capacity. Therefore, attorneys should first and foremost consider the person’s preferences and views, rather than only consider what they think is the right choice.
This means it’s important to include cultural, personal and religious beliefs. For example, while an attorney may consider a monthly donation to a charity or church to be a waste of money, if the principal is a life-long supporter of the organisation and feels passionately about the cause, the attorney must respect this and should continue these donations.
As an attorney, you may misunderstand your role. Many attorneys are not aware that their decision making can be scrutinised by third parties, such as health professionals, service providers and other family members. If these third parties are concerned about your conduct as an attorney, they may seek to have your role reviewed by an independent tribunal or board.
This is why it is necessary to keep records, be able to explain large or unusual purchases and consult with key people in the principal’s life about the decisions you are making.
In summary, EPOA documents can be complex, but they don’t have to be. The most important take-away to remember is that the attorney should always be making decisions that the person would be making, if they could.
Also keep in mind that while there are similarities between EPOAs regardless of where you are living in Australia, specific rules may vary from state to state. You can access the relevant information on EPOAs for your state or territory here. The federal government recently revealed plans to make these guidelines consistent across Australia, so be aware that changes may be coming in the next few years.
If you are creating your EPOA, or acting as an attorney for someone else, remember that all decisions must make the person’s life better. A loss of capacity does not mean a loss of respect – we should all be happy, safe and respected as we grow older.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.