When it comes to planning for the future, most people immediately think about drafting a Will. While Wills are undoubtedly important for ensuring your assets are distributed according to your wishes, there is another equally critical tool that is often overlooked: the Enduring Power of Attorney (EPOA).
An EPOA is not just a legal document; it is a safeguard that allows someone you trust to make financial and legal decisions on your behalf if you are ever unable to do so. Despite its importance, many people delay setting one up — often until a crisis arises. The consequences of not having an EPOA in place can be significant, both for you and your loved ones.
In this article, we will explore what an Enduring Power of Attorney is, why it matters, the risks of not having one and how you can ensure your affairs are protected in advance.
What is an Enduring Power of Attorney?
An Enduring Power of Attorney is a legal document that appoints a person (or sometimes more than one person) to act on your behalf in financial and legal matters if you become incapable of doing so yourself.
Key points to understand:
- Enduring vs. General Power of Attorney: A general Power of Attorney ceases if you lose mental capacity. An Enduring Power of Attorney ‘endures’ and continues to operate even if you become incapacitated.
- Scope of authority: Your appointed attorney can manage your bank accounts, pay bills, sell or purchase property and make other financial decisions in accordance with your best interests and your instructions.
- Choice of attorney: You can select someone you trust implicitly, often a family member, close friend or professional advisor.
In short, an EPOA provides continuity and security for your affairs. It ensures that decisions can be made efficiently and in accordance with your wishes, even if you cannot make them yourself.
Why an EPOA is Crucial
Life is unpredictable. Accidents, illness or sudden incapacity can leave you unable to manage your finances or make important legal decisions. Without an EPOA, your family may face significant hurdles if they need to act on your behalf.
Avoid stress and conflict
If there is no EPOA in place, family members may need to apply to the NSW Civil and Administrative Tribunal (NCAT) for authority to manage your affairs. This process can be:
- Stressful as families are often already dealing with emotional challenges when a loved one becomes incapacitated.
- Time-consuming as NCAT applications can take weeks or even months to process, delaying access to necessary funds and financial management.
- Expensive as legal fees and administrative costs can add up quickly, reducing the resources available to support you and your family.
Having an EPOA in place prevents these issues by allowing your chosen attorney to act immediately and without court intervention.
Protect your interests
An Enduring Power of Attorney ensures that someone who understands your values, priorities and financial circumstances can make decisions on your behalf. This is particularly important for:
- Paying bills and managing day-to-day finances
- Managing investments, superannuation or property
- Making decisions about business matters if you own a company.
Without an EPOA, these tasks may be delayed, mismanaged or fall into the hands of someone who does not fully understand your wishes.
Protecting your loved ones
An EPOA is not just about your finances - it’s about peace of mind for your family and friends. When your affairs are in order, your loved ones can focus on providing emotional support and care rather than being caught up in legal or financial disputes.
What happens if you don’t have an EPOA?
Many people assume that if they become incapacitated, their family can simply step in and manage their affairs. In reality, this is not the case in New South Wales.
Without an EPOA, your family may need to apply to NCAT to obtain authority to act on your behalf. The process involves filing legal documents, attending hearings and potentially paying legal fees. Decisions may be delayed, potentially causing financial hardship, unpaid bills or missed opportunities for property management or investment.
In short, the absence of an EPOA can create unnecessary stress, delay and cost for the very people you care about most.
Who Should Consider an EPOA?
The simple answer is: everyone over 18 who wants to protect themselves and their loved ones.
Specific people who should prioritise creating an EPOA include:
- Parents or caregivers: Those with dependents often rely on the continuity of financial management for household stability.
- Business owners: Having an EPOA ensures that business operations can continue smoothly if you become incapacitated.
- Individuals with complex finances: Property, investments or other assets require careful management.
- Anyone concerned about future incapacity: Illness, injury or age-related cognitive decline can make financial and legal decision-making impossible without an EPOA.
Even young, healthy adults should consider creating an EPOA as accidents or sudden illnesses can happen to anyone.
Choosing the Right Attorney
Selecting the right person to act as your attorney is one of the most important decisions in establishing an EPOA. Here are some factors to consider:
- Trustworthiness – Your attorney will have significant authority over your finances and legal affairs. Choose someone reliable and ethical.
- Competence – Consider whether the person has the skills and understanding to manage complex financial matters if necessary.
- Availability – Your attorney should be able to commit the time and attention required to manage your affairs when needed.
- Family dynamics – Selecting someone impartial or who can navigate family relationships without conflict is critical.
Some people also choose to appoint professional attorneys such as lawyers or accountants, especially if their financial situation is complex.
Steps to Setting Up an EPOA
Setting up an Enduring Power of Attorney is straightforward but it must comply with legal requirements. The main steps include:
- Choose your attorney(s) – Decide who you trust to act on your behalf.
- Decide the scope of authority – Your EPOA can grant wide-ranging powers or be limited to specific financial matters.
- Complete the EPOA form – In NSW, the form must be signed, witnessed and executed according to statutory requirements.
- Store the document safely – Keep the original document secure and inform your attorney(s) of its location.
- Review regularly – Life circumstances change so review your EPOA periodically to ensure it still reflects your wishes.
Your attorney only has authority when you are incapable of managing your own affairs so having clear documentation is essential to avoid confusion.
Common misconceptions about EPOAs
Many people hesitate to create an EPOA because of misunderstandings, such as:
- ‘It’s only for the elderly’ - In reality, anyone over 18 should consider an EPOA. Accidents or illnesses can affect anyone at any age.
- ‘I don’t need one because my family will just manage things’ - Without an EPOA, family members must apply to NCAT for authority, a process that can be stressful, slow and costly.
- ‘Creating an EPOA means losing control immediately’ - Your attorney only acts if you are incapacitated so until then, you retain full control over your finances and decisions.
How Aubrey Brown Lawyers can help
At Aubrey Brown Lawyers, we guide clients through the entire process of creating an Enduring Power of Attorney. Our experienced Wills & Estates team can:
- Advise on choosing the right attorney
- Draft and execute EPOA documents in compliance with NSW law
- Explain the scope of powers and help tailor them to your needs
- Review and update existing EPOAs to reflect changes in circumstances
- Provide advice on related matters including Wills, estate planning and asset protection.
By working with our team, you can ensure your affairs are protected, your wishes are respected and your loved ones are supported.
Call our friendly Wills and Estate Planning team on (02) 4350 3333 to book an appointment.
