When should the power under my Enduring Power of Attorney start?

When setting up an Enduring Power of Attorney (EPOA), one of the most critical decisions you'll need to make is determining when the authority of your attorney should begin. Many clients assume that the EPOA only takes effect when they become incapacitated, but this isn't always the case. As experienced enduring power of attorney lawyers, we typically recommend that the EPOA activates only when a medical practitioner certifies incapacity. However, in some circumstances an immediate appointment may be appropriate.

Understanding these options and the rationale behind them is essential for making an informed decision that aligns with your wishes and circumstances. Here, we'll explore both approaches—immediate effect and activation upon incapacity—and discuss the potential implications of each choice.

Immediate Activation of an Enduring Power of Attorney

An immediate EPOA means that your chosen attorney has the authority to make financial decisions on your behalf as soon as the document is executed. This can seem like a proactive approach, providing a ready safety net for managing your affairs. However, there are some key points to consider:

1.      Practical Protections in Place: In many cases, while the EPOA is immediate, the original document remains with the solicitor until it is needed. This means that your attorney cannot act on your behalf until they have access to the EPOA. Additionally, some solicitors do not have the attorney sign the document until it is required, adding another layer of control over its use.

2.      Addressing Early Cognitive Decline: The rationale behind immediate activation is particularly compelling when dealing with elderly individuals who may be in the early stages of dementia or Alzheimer’s disease. In these cases, the individual may still have legal capacity, but their decision-making abilities are impaired. An immediate EPOA allows the attorney to step in and manage affairs without waiting for a formal declaration of incapacity, which can be a challenging and lengthy process. This approach helps prevent poor financial decisions that could arise due to cognitive decline.

While these reasons may be compelling in certain scenarios, it’s essential to balance them against the need for personal autonomy and control over your financial and health decisions. Many people prefer not to relinquish this control unless absolutely necessary, which is why an EPOA activated upon incapacity may be more suitable.

Activation Upon Incapacity

For those who value autonomy and wish to maintain control over their decisions for as long as they are capable, an EPOA that activates upon incapacity is often the preferred choice. At Vicca Law, we find that approximately 95% of our clients choose this option. Here's why:

1.      Preserving Autonomy: With this approach, your attorney can only begin acting on your behalf once a medical practitioner certifies that you are no longer capable of making decisions. This ensures that your financial and health autonomy is protected until you truly need assistance.

2.      Clear Protection for Attorneys and Beneficiaries: When an EPOA is activated based on incapacity, it provides a clear and documented point at which an attorney’s authority begins. This clarity can help prevent disputes among family members about when an attorney should start taking control. It also protects the attorney from accusations of acting prematurely or unfairly.

3.      Family Dynamics and Conflict Prevention: In families where there may be concerns about fairness or accusations of overstepping boundaries, having a medically certified point of activation can serve as a protective mechanism. This approach ensures that everyone involved understands the specific circumstances under which the attorney's authority begins.

When Might an Immediate Activation Be Appropriate?

While we generally recommend an EPOA based on incapacity, there are certain circumstances where an immediate EPOA might be more appropriate:

1.      Terminal or Serious Illness: Clients facing terminal or severe illness may find it burdensome to continue making complex financial decisions. An immediate EPOA allows their attorney to take over without delay, easing the decision-making burden.

2.      Elderly Clients with Practical Needs: For clients over the age of 75 who may struggle with tasks like internet banking or managing their bills, an immediate EPOA can provide practical support. This is especially true if they are in a couple and serve as each other’s first attorney. In these cases, immediate activation allows for easier management of day-to-day tasks.

A Balanced Approach: Tailoring Your EPOA to Your Needs

Ultimately, the decision of when your EPOA should take effect is a highly personal one that depends on your unique circumstances, preferences, and family dynamics. At Vicca Law, we believe in having detailed discussions with our clients to explore different scenarios and ensure their wishes are accurately reflected in their estate planning documents.

For example, a recent client case involved an EPOA set to activate upon incapacity. The client’s father was initially capable but later experienced a rapid decline. The son, appointed as the first attorney, appreciated that a doctor's certification of incapacity provided a clear line for when he should step in. It also helped prevent any conflict with his sibling, who was named as the second attorney, by offering a clear, legally recognized point at which the power of attorney began.

Ensuring Your EPOA Reflects Your Wishes

Enduring Powers of Attorney are often overlooked in estate planning discussions, but they are crucial because they apply while you are still alive. They provide a way to ensure your health and financial decisions are handled according to your wishes.

If you already have an EPOA in place and discover that it is set to take effect immediately, but you would prefer it to activate only upon incapacity—or if you simply want to review your current documents to make sure they align with your wishes—Vicca Law is here to help.

Take control of your future by ensuring your Enduring Power of Attorney is set up according to your wishes. Book a consultation with Vicca Law today to review or update your EPOA, or to create a new one that provides the right balance of autonomy, protection, and practicality. Visit www.viccalaw.com.au or email Lidia directly at lidia@viccalaw.com.au to
schedule an appointment. Let’s ensure your future is in safe hands, exactly the way you want it to be.