The pros and cons of enduring powers of attorney as to property

 Enduring powers of attorney as to property

In New Zealand, an Enduring Power of Attorney (EPA) regarding property is a legal document that allows you to appoint someone to make decisions about your property and finances. This can be effective either immediately or when you lose mental capacity. Here are some pros and cons of this arrangement:

Pros

1. Continuity in Financial Management: If you become mentally incapacitated due to injury, illness, or age-related conditions, the EPA ensures that someone you trust can manage your property and finances without interruption.

2. Control Over Attorney Appointment: You have the freedom to choose someone you trust and who understands your wishes and preferences.

3. Security Measures: Holding the original document limits misuse, as the attorney can only act when they physically possess the original document. The fact that electronic copies are not valid for use provides a layer of security.

4. Flexibility in Activation: You can choose to have the EPA come into effect immediately, or only when you lose mental capacity, offering flexibility based on your personal circumstances and preferences.

5. Useful During Physical Incapacity or Absence: If your EPA comes into effect immediately then if you are physically incapacitated (e.g., due to an accident or illness) or out of the country, your attorney can manage your property matters, ensuring that bills are paid, and investments are looked after.

6. Avoiding Court-Appointed Managers: If you don't have an EPA and lose mental faculties, the Family Court will appoint a Property Manager. This process occurs without your input, meaning you can't choose who manages your affairs or limit their powers. By having an EPA, you retain control over who is appointed to manage your property.

7. Long-Term Arrangement: A court-appointed Property Manager's tenure is limited to three years and must then be renewed. In contrast, an EPA can provide a more stable and long-term arrangement, reducing the need for frequent legal interventions.

8. Reduced Legal and Administrative Burdens: Without an EPA, the court-appointed attorney is required to file annual accounts with the Court, which are audited by the Public Trust at your expense. This process can be cumbersome and expensive. An EPA simplifies this process and potentially reduces costs.

9. More Cost-Effective in the Long Run: While setting up an EPA involves some initial costs, it can be more cost-effective in the long run compared to the ongoing expenses of a court-appointed Property Manager, with audits and legal processes that add up over time.

These points emphasize the importance of proactively setting up an EPA for property in New Zealand. It allows you to maintain control over who manages your property and finances and can be a more efficient and cost-effective solution compared to court-appointed alternatives.

Cons

1. Risk of Misuse: Despite security measures, there's always a risk of misuse or mismanagement of your property by the appointed attorney.

2. Revocation Complexity: If you change your mind, revoking the EPA is a simple process so long as you have not already lost mental capacity.

3. Limited Oversight: Once the EPA is in effect, there may be limited oversight of the attorney’s actions, which could potentially lead to mismanagement or abuse.

4. Dependency and Vulnerability: Relying on another person for property management can make you vulnerable, especially if your relationship with the attorney changes over time.

5. Legal and Administrative Costs: Setting up an EPA involves legal advice and potential administrative costs, which might be a consideration for some.

In summary, an EPA for property in New Zealand provides a safety net for managing your property and financial affairs in various circumstances, but it also comes with risks that need to be carefully considered and mitigated through careful selection of the attorney and clear terms in the EPA document.