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 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.
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.
There are two different types of 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.
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.
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.
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:
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.
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.)