Partner at Clark Boyce Lawyers
How to give a power of attorney
What is a power of attorney?
A power of attorney is an authority that you give someone to handle your affairs.
The attorney has a duty to act in your best interests and take prudent care in managing your business affairs.
There are two types of power of attorney:
- an ordinary power of attorney
- an enduring power of attorney
Ordinary power of attorney
An ordinary power of attorney is valid only if you, the person giving the authority, have the capacity to deal with the matters yourself. The power therefore ceases if you become mentally incapable.
This kind of power will commonly be given if, for example, you are planning a trip overseas.
Enduring power of attorney
By contrast, an enduring power of attorney continues to be valid even if you become mentally incapable. Therefore if you lose capacity, the attorney can still manage your affairs.
An enduring power will usually be given when people are concerned about who will look after their affairs if they become unable to do so.
The ability to grant an enduring power of attorney arises under the PROTECTION OF PERSONAL AND PROPERTY RIGHTS ACT 1988.
Types of enduring power of attorney
There are two different types of enduring power of attorney:
- a power that covers your property â€“ In this case, you can choose when the power can be used: either before you become mentally incapable, or after, or both.
- a power that covers your personal care and welfare â€“ This can only come into effect after you have become mentally incapable, since before then you are able to make your own decisions about these things.
How do I appoint an enduring power of attorney?
There are some formal requirements for creating an enduring power of attorney that you will need to comply with in order for the authority to be valid.
Standard forms are set out in the Third Schedule of the PROTECTION OF PERSONAL AND PROPERTY RIGHTS ACT 1988 (there is one form for an enduring power of attorney for property, and another for personal care and welfare). You can obtain copies of the forms from the Public Trust Office or another trustee company. The Family Court also provides copies of the forms; you can download them from their website at www.courts.govt.nz/family (under Forms).
The form must be signed by both you and the attorney (or attorneys) and then witnessed.
Who should I appoint as attorney?
Most people appoint a close friend, family member or lawyer as their attorney. It is generally preferable to appoint two or more people.
The person to whom an enduring power of attorney is given must be at least 20 years old, must not be a bankrupt, and must not be suffering from any legal incapacity.
How many people can I give an enduring power of attorney to?
You may appoint more than one property attorney, acting together or separately, at any one time. But you may have only one attorney to be responsible for your personal care and welfare if you become mentally incapable.
What exactly does "mentally incapable" mean?
In relation to property, you are "mentally incapable" if you are not wholly competent to manage your property affairs.
In relation to your personal care and welfare, you are "mentally incapable" if you:
- lack, wholly or partly, the capacity to understand the nature and to foresee the consequences of decisions relating to your personal care and welfare, or
- wholly lack the capacity to communicate decisions relating to your personal care and welfare, even if you are able to understand the nature and to foresee the consequences of those decisions
Can I cancel an enduring power of attorney?
You may cancel an enduring power of attorney at any time, as long as you are mentally capable of doing so. This should be done in writing, in a document that has been signed and witnessed in the same way that the original power of attorney was witnessed.
You can cancel an ordinary power of attorney at any time. If you become mentally incapable, the power necessarily ceases to have effect.
What if I become incapable and I haven't given a power of attorney?
If you have not given an enduring power of attorney and you become incapable of managing your affairs, the Act sets out a procedure for applying to the court for it to appoint a welfare guardian to deal with your personal care and welfare, or a property manager to deal with your property. (See How to obtain a personal or property order for somebody who lacks capacity.)
- You have the right to be very specific in the powers that you wish to give the attorney; if the terms of the authority you give are too general the attorney may be able to do more tasks than you in fact wanted.
- If you give an enduring power of attorney over property, you should be clear as to when the attorney is to begin to act for you: this can be either as soon as you have given the authority or at the time that you become mentally incapable. (By contrast, an attorney can begin to act in relation to your personal care and welfare only when you have become mentally incapable.)