The misuse of enduring powers of attorney

The Law Commission has commenced a project aimed at looking at the lack of protection for those whom the Protection of Personal and Property Rights Act (PPPR Act)is designed to assist

Monday, December 18th 2000, 3:50PM

You have probably heard the term "Power of Attorney". Giving someone else a Power of Attorney is an established method of appointing someone else to act as your agent.

However, a conventional Power of Attorney doesn’t apply if you lack mental capacity to give instructions. In other words, it can’t operate in many situations when it is needed most. To overcome the problem, the Government in 1988 introduced the ability for individuals to make an Enduring Power of Attorney (EPA) – the relevant Act is the Protection of Personal and Property Rights Act (PPPR Act).

The Law Commission has commenced a project as a result of concern expressed by Age Concern Auckland. This project is aimed at looking at the lack of protection for those whom the Act is designed to assist that can result from an absence of safeguards under Part XI of the PPPR Act. The Law Commission’s own findings suggest that there are issues surrounding EPA’s that warrant attention.

Some of the current problems:

No monitoring of the donor’s capacity when signing an EPA.

The there is no compulsory requirement for independent legal advice.

There is no machinery in place to ensure the donor knows they have a right to revoke an EPA.

There is no requirement to file accounts comparable to the previously repealed Act and no independent monitoring of the attorney.

The power of the Family Court to intervene is reliant on someone setting proceedings in action.

Understandable reluctance by donors to take court action against family members.

Types of misuse:

Embezzlement

The attorney helping themselves to the donor’s belongings (e.g. consumer durables and decorative items)

Failure to institutionalise the donor where this is plainly necessary (motivated by a desire to not diminish the size of the assets).

The reverse situation of prematurely institutionalising the donor to suit the attorney.

Following the institutionalising of the donor, selling the donor’s house without their knowledge, thus removing the hope of the donor of ever returning home (however irrational that hope maybe).

The Law Commission has looked at possible remedies to combat the misuse of EPAs and submissions in response to the discussion paper circulated were due by the 31^st of July 2000.

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