The difference between Enduring Powers of Attorney and PPPR Act orders
It is important to have Enduring Powers of Attorney (“EPOAs”) in place so that if an unexpected medical event happens the right people can look after you.
If you lose your mental capacity and do not have EPOAs in place, it can be a costly, time-consuming and stressful process for your loved ones to legally have the right to look after you.
The Protection of Personal and Property Rights Act 1988 (“PPPR Act”) provides what happens when a person loses their capacity to manage their personal and property affairs (both when they have EPOAs in place and when they don’t).
EPOAs are legal documents that set out who can take care of your personal or property matters if you are unable to (for example, if you have a stroke, are in a coma or have a cognitive disorder). The person you appoint to look after you is called your “attorney”. There are two kinds of EPOA; property and personal care and welfare.
To be valid, the Enduring Power of Attorney must be advised on by a lawyer or registered legal executive while you have medical capacity.
The Property EPOA gives your attorney power to make decisions in relation to your money and property, such as the sale of a home or payment of your bills.
You can choose whether your property attorney can act immediately (while you have capacity) or only if you lose capacity. The Property EPOA (or PPPR order – more below), can appoint one or more attorneys or a trustee corporation. You can also require your attorneys consult with or provide information to certain people.
Personal care and welfare
The Personal Care and Welfare EPOA gives your attorney the power to make decisions relating to your health and welfare, such as choosing a rest home, your level of care or medical treatment.
The Personal Care and Welfare EPOA can only come into effect if a doctor certifies you have lost capacity and are unable to make your own decisions. The Personal Care and Welfare EPOA (or PPPR order) can only appoint one individual at a time to make decisions on your behalf. However, you can appoint successor attorneys and/or require that the first attorney consult with other people when making a decision.
PPPR Act orders
If EPOA are not in place when someone loses capacity, an application must be made to the Family Court to appoint someone to make decisions on your behalf.
These documents can also be organised through a lawyer, but this process takes place once you have lost capacity. You therefore have less control over who is appointed. Whilst every effort is made to appoint a suitable person, it may not be exactly who you would have intended to appoint given it is not a decision in your control any longer.
Why should I enact EPOA?
Arranging for someone to be able to make decisions on your behalf by drafting EPOAs is a cheaper and more simple process where you are in complete control over who is appointed and what activities the appointed person can complete on your behalf, such as making gifts to family members or charity.
If you lose capacity before you have EPOA in place, it is likely that someone will need to be appointed as your property manager and welfare guardian. This is so that they can enter contracts on your behalf, such as for you to be cared for in a rest home or to sell your property to help meet your care expenses and make decisions about your medical care when you are not in a position to do so yourself. Rest homes will not accept you into care if no EPOAs or PPPR Act orders are in place.
PPPR Act orders process
The process for applying to be a property manager or welfare guardian includes a medical assessment being conducted, the drafting of applications, affidavits and consent documents, seeking consent from interested parties, filing all documents in court, service of documents on interested parties, a lawyer for subject person being appointed and assessing the subject person, and court approval of the person to be appointed. If the appointed person is disputed, there may also need to be a court hearing.
Further, once someone has been appointed to be your property manager and welfare guardian, that person must file a statement of assets and liabilities with the Court each year, and the orders need to be reviewed by the court – initially every three years, but the court may then decide that every five years is acceptable. A lawyer can assist the appointed person with this process if required, however this is likely to be at a cost to you personally. A record of income and outgoings must be kept, with any money spent for the benefit of the protected person only – not the appointed person. Public Trust conducts reviews of this.
PPPR Act orders cease on death, bankruptcy and if the protected person regains capacity – although in most cases this is not likely to occur if the incapacity is due to dementia or permanent disability.
At a time when you have recently lost capacity and your family needs to ensure that you are cared for appropriately, it is far simpler if you have signed EPOA which can then come into effect immediately. If you have not entered into EPOA then your family can be put in the position of having to go through the Family Court process to obtain welfare guardian and property manager orders as described above. This process takes time and effort which both increase cost. This can also mean there is a hold up in important decisions being able to be made, as it generally takes several months to work through the Court process before orders for appointment as welfare guardian/property manager take effect. It is significantly quicker and less expensive to enter into EPOAs when you have capacity, than for your family members to have to seek PPPR orders once capacity has been lost.
Just like Wills, EPOAs are important documents to draft whilst you have capacity. Having documents like these in place will save your family time, cost and stress if you lose capacity and they need to get the Family Court involved to look after your personal care and welfare, and property matters. It will ensure that the people you trust and want to take care of these roles are in position to act immediately should they need to.
If you have any queries, would like to prepare EPOAs or need to apply for PPPR Act orders, please reach out to us at Holland Beckett Law.