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Power of Attorney vs. Enduring Power of Attorney (EPOA)

Key Takeaway

An Enduring Power of Attorney (EPOA) is a legal document allowing someone to make decisions on your behalf, continuing even if you lose mental capacity. A general Power of Attorney (POA) ends if you lose mental capacity. EPOAs are governed by the Protection of Personal and Property Rights Act 1988 and have strict formal requirements for creation and use.

Power of Attorney (POA) vs. Enduring Power of Attorney (EPOA) in New Zealand

In New Zealand, appointing someone to make decisions on your behalf can be done through a Power of Attorney (POA) or an Enduring Power of Attorney (EPOA). Understanding the differences between these two legal instruments is crucial, particularly concerning what happens if the person granting the power, known as the donor, loses their mental capacity.

What is a General Power of Attorney (POA)?

A general Power of Attorney (POA) is a legal document where one person, the donor, authorises another person, known as the attorney, to act on their behalf for specific purposes or for all general matters. This authority can cover financial decisions, property transactions, or other legal actions. A general POA is often used for convenience, for example, to allow someone to manage affairs while the donor is overseas.

Unlike an enduring power of attorney, a general power of attorney typically ceases to be valid if the donor loses mental capacity (the ability to make their own decisions) [Source: The distinction is implicit in the Protection of Personal and Property Rights Act 1988, which explicitly defines powers that endure incapacity, thereby distinguishing them from general powers which do not]. It also ceases upon the death of the donor or the attorney, or if the donor revokes it.

What is an Enduring Power of Attorney (EPOA)?

An Enduring Power of Attorney (EPOA) is a specific type of legal document that allows a person (the donor) to appoint another person (the attorney) to make decisions on their behalf, and crucially, this authority endures (continues) even if the donor later loses their mental capacity [Source: Protection of Personal and Property Rights Act 1988, s 93]. EPOAs are governed by the Protection of Personal and Property Rights Act 1988 (PPPR Act).

There are two main types of EPOA:

  1. Property EPOA: This covers decisions about the donor's finances and property, such as bank accounts, investments, and real estate [Source: Protection of Personal and Property Rights Act 1988, s 95]. A property EPOA can be made effective immediately, or it can specify that it only becomes effective if the donor loses mental capacity [Source: Protection of Personal and Property Rights Act 1988, s 98].
  2. Personal Care and Welfare EPOA: This covers decisions about the donor's personal care and welfare, including healthcare, living arrangements, and daily activities [Source: Protection of Personal and Property Rights Act 1988, s 96]. An EPOA for personal care and welfare can only become effective if the donor has been assessed by a health practitioner (such as a medical doctor) as having lost mental capacity to make decisions about their personal care and welfare [Source: Protection of Personal and Property Rights Act 1988, s 99(1)]. It cannot cover certain highly personal decisions, such as marriage or adoption [Source: Protection of Personal and Property Rights Act 1988, s 99A].

Key Requirements for Creating an EPOA

To be legally valid in New Zealand, an EPOA must meet strict formal requirements:

  • In Writing: The EPOA must be in writing [Source: Protection of Personal and Property Rights Act 1988, s 94A].
  • Signed by Donor: The donor must sign the EPOA [Source: Protection of Personal and Property Rights Act 1988, s 94B(1)(a)].
  • Signed by Attorney: The attorney must sign the EPOA [Source: Protection of Personal and Property Rights Act 1988, s 94B(1)(b)].
  • Witnessed: The signatures of both the donor and the attorney must be witnessed by an authorised person. This witness must be a lawyer, a qualified legal executive, or an authorised officer of a trustee corporation [Source: Protection of Personal and Property Rights Act 1988, s 94B(1)(c) and s 94B(2)].
  • Witness Certification: The witness must certify in writing that they have explained certain matters to the donor (such as the effect of the EPOA and the attorney's duties) and that the donor appeared to understand them and was not acting under undue influence [Source: Protection of Personal and Property Rights Act 1988, s 94B(3)].

Duties of an Attorney under an EPOA

An attorney appointed under an EPOA has significant responsibilities and duties, which include:

  • Acting in Best Interests: The attorney must act in the donor's best interests and promote their independence [Source: Protection of Personal and Property Rights Act 1988, s 93(2)].
  • Consultation: If practicable, the attorney must consult with the donor about decisions being made. If the donor is mentally incapable, the attorney should consult with other relevant people, such as family members or medical professionals [Source: Protection of Personal and Property Rights Act 1988, s 93A(1) and s 93A(2)].
  • Record Keeping (Property EPOA): An attorney for a property EPOA must keep accurate records of all transactions made on behalf of the donor [Source: Protection of Personal and Property Rights Act 1988, s 93B].
  • No Delegation: An attorney must generally not delegate their powers to another person unless the EPOA expressly authorises it [Source: Protection of Personal and Property Rights Act 1988, s 93C].

When an EPOA Ends

An EPOA can come to an end in several circumstances, including:

  • Revocation by Donor: The donor can revoke the EPOA at any time, provided they have mental capacity to do so [Source: Protection of Personal and Property Rights Act 1988, s 105(1)(a)].
  • Death of Donor: The EPOA automatically terminates upon the death of the donor [Source: Protection of Personal and Property Rights Act 1988, s 106].
  • Death or Incapacity of Attorney: The EPOA may terminate if the attorney dies, loses mental capacity, or becomes bankrupt (for a property EPOA) [Source: Protection of Personal and Property Rights Act 1988, s 105(1)(c) and s 105(1)(d)].
  • Court Order: The Family Court has the power to review, vary, or revoke an EPOA if it is not operating in the donor's best interests or if there are concerns about the attorney's actions [Source: Protection of Personal and Property Rights Act 1988, s 105(1)(e) and s 102].

Key Differences between POA and EPOA

Feature General Power of Attorney (POA) Enduring Power of Attorney (EPOA)
Validity on Incapacity Ceases to be valid if the donor loses mental capacity. Endures (continues) even if the donor loses mental capacity [Source: Protection of Personal and Property Rights Act 1988, s 93].
Purpose Often for convenience, specific transactions, or temporary absence. Planning for future incapacity, ensuring ongoing decision-making.
Governing Law Largely common law principles or specific contractual arrangements. Strictly governed by the Protection of Personal and Property Rights Act 1988.
Formalities Less strict formal requirements than EPOA. Requires specific signing, witnessing by a legal professional, and witness certification [Source: Protection of Personal and Property Rights Act 1988, s 94B].
Scope Can be broad or specific, but limited by donor's capacity. Two types: Property, and Personal Care and Welfare. Specific rules apply to each [Source: Protection of Personal and Property Rights Act 1988, Part 9].

When to Seek Independent Legal Advice

It is highly recommended that individuals considering creating an EPOA or acting as an attorney seek independent legal advice. A lawyer can ensure the document accurately reflects the donor's wishes, meets all legal requirements, and can explain the full implications and responsibilities involved for both the donor and the attorney. Concerns about an existing EPOA or an attorney's actions may be addressed by the Family Court. Community Law Centres (https://communitylaw.org.nz/) offer free legal services and can provide information and assistance on these matters.

Key Resources