Most of us may have an up-to-date Will and many assume that having a Will is the main focus of any personal asset planning or business planning. Unfortunately having a legally binding Will only provides you with partial protection.
It is important to understand that a Will covers you when you pass away and who should look after your affairs after you are no longer here. But the question is, who will look after your affairs if something happens to you and you are still alive?
In such event, you will require an Enduring Power of Attorney.
What is an EPOA?
An EPOA is a power of attorney that continues to operate even though you may later become legally incapacitated (i.e. if you become of unsound mind or are unable to communicate in any way, perhaps after a stroke). Taking the time to make and EPOA ensures that your financial affairs is being looked after by someone you know and trust.
An EPOA cannot be made after you become legally incapacitated. This is because, to be capable of signing a power of attorney, a donor (you) must understand the nature and effect of the document at the time of signing.
Here is a Case Study to better understand the importance of EPOA
Manny and Rita are a couple in their thirties, with two young children, a home and are paying off a mortgage.
Both Manny and Rita have made Wills, but they do not have Enduring Powers of Attorney. In fact, they are not even really sure about what an Enduring Power of Attorney is. In any case, they think they are far too young to have to worry about things like that, especially when they hold most of their assets jointly.
The main ‘bread-winner’ for the family, Manny, was driving home from work one night and was hit by an on-coming car. The accident left Manny with traumatic injuries and partially brain damaged, after he eventually came out of a coma.
It became apparent that it was necessary to sell the house and buy another house that was amenable to Manny’s injuries for when he returned home from hospital. There was just one problem. Rita needed Manny’s signature on the Contract to sell the house. Manny could not sign the Contract whilst he was incapacitated.
Rita had to make an application to SACAT to be appointed as Manny’s Financial Manager so that she could get consent to sign the house Contract on Manny’s behalf. This process took several months to finalise and Rita missed out on purchasing the perfect house because another buyer beat her to it before she obtained consent to sell the current home. This would not be the case if Manny had an EPOA in place.
Many couples think that if they own assets jointly, they do not need an Enduring Power of Attorney. This is simply not the case as signatures of all owners (or their Attorney) are always required on most dealings.
In short, a will has legal force after your death. A power of attorney is for your financial affairs while you are alive. When you die, your power of attorney (whether general or enduring) ceases automatically. That is why it is important to have both an EPOA and a Will.
If you would like to discuss or make a power of attorney, simply email us at firstname.lastname@example.org or call at 08 8410 9069 to arrange an appointment.
Alternatively, if you would like to prepare a Will, Straits Lawyers are now offering an online package for Advance Care Directives and Wills.
Please note that this article does not constitute legal advice.