Getting It Right, The First Time
When it comes to planning for the future, few documents carry as much weight as an Enduring Power of Attorney (EPA). This single piece of paper can give someone the power to make life-changing decisions about your money, property, and even your health. In the right hands, it can be a useful safeguard. In the wrong hands, it can leave you vulnerable to financial loss and exploitation.
That’s why the most important question isn’t just “Do I need an EPA?”, it’s “Who can I trust with this level of power?”
What is an Enduring Power of Attorney (EPA)?
An Enduring Power of Attorney (EPA) is one of the most powerful documents you can sign – arguably even more so than a will. It allows you (the Principal) to appoint someone (your attorney) to make decisions on your behalf for financial and personal/health matters.
Depending on how it’s written, your attorney could be authorised to do almost anything you could legally do yourself. When advising clients, we like to put it as simply as possible – you need to pick your attorney carefully, because you may be giving your attorney the power to potentially rob you blind.
Why EPA’s are Powerful
Unlike many other legal documents, an EPA continues to operate even if you lose capacity. That means if you suffer a stroke, dementia, or any other condition that prevents you from making decisions, your attorney can step in and manage your affairs.
This is a crucial safeguard, but also a moment of great vulnerability, as you may no longer have oversight of what your attorney is doing.
The Risk of Misuse
In 2019, there was an article concerning the criminal charges of a lady who has allegedly misappropriated almost $3 million from an elderly lady, under an Enduring Power of Attorney. In this instance, criminal charges were laid, but the money was gone, and unlikely to be recovered.
This shows the harsh reality: while the law requires attorneys to account for misusing a Principal’s property, once money is spent, it may be impossible to get back. Criminal charges don’t put stolen funds back into your bank account.
Real-Life Consequences
If you were to have a stroke, suffer from dementia or Alzheimer’s, or otherwise be incapacitated and unable to communicate your decisions, then your attorney can step in and look after your affairs whilst you lack capacity.
While this can be a lifeline when trusted people are acting properly, it’s also the time when you’re most vulnerable. If your attorney chooses to abuse their power, they could:
- start withdrawing money or transferring assets into their own name;
- sell your home or investments without your knowledge;
- use your funds to pay off their own debts or gambling habits.
The difficulty is that you may not notice because you’ve lost capacity, and others might not pick up on the problem until much later. By then, significant sums could be gone. Most commonly, the issue only comes to light when a family member, lawyer, or authority such as the Public Guardian or Public Trustee steps in.
Good Practice: Protecting Yourself
When setting up an EPA, it’s not just about who you appoint, but also about how much power you give them. You can include specific safeguards in the document to reduce risk and protect yourself. For example:
- Limit withdrawals or large transfers
You might allow your attorney to pay everyday bills and living expenses but require a second signature or independent approval for anything over a certain amount (e.g. $5,000). This makes it harder for one person to drain your account. - Appoint more than one attorney
Having two attorneys act jointly means they must both agree before making financial decisions. This can be useful for big decisions like selling property or managing investments, and creates a built-in system of accountability. - Clearly set boundaries
You can state in the EPA what your attorney cannot do, such as selling the family home, gifting money to themselves, or making loans to others. - Consider staged powers
Some people set up an EPA where certain powers only activate if a doctor certifies they’ve lost capacity. - Choose professionals for complex matters
You might appoint a family member for personal and health decisions, but appoint a trusted professional or organisation (like ORG Law) for financial matters, especially where large estates, property portfolios, or businesses are involved.
So How Much Trust is Enough?
The answer is non-negotiable: absolute trust. If you have any doubts about a person’s honesty or reliability, do not appoint them. Even a small hesitation is a red flag – your entire livelihood and estate are at risk.
Taking the Next Step
Choosing the right attorney is a life-defining decision. For peace of mind, you may want to appoint a trusted professional or an organisation like ORG to act as your attorney. This reduces risk, provides accountability, and helps protect your legacy.
To find out more about appointing a safe and reliable attorney, speak to the team at ORG today.
