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Promises to fix powers of attorney law unheeded

Warnings three years ago that the law concerning powers of attorney needed to be changed appear to have gone unheeded.

Friday, May 7th 2004, 9:30PM

by Rob Hosking

Age Concern has again raised the issue after a survey showed that more than 20% of the elderly had suffered “material, financial or psychological abuse” by someone they had entrusted with an enduring power of attorney.

The law allows people planning their retirement to give enduring power of attorney to another party when they can no longer manage their own affairs.

That power covers property, other personal care and welfare.

Three years ago the Law Commission recommended changes to the existing law.

A year ago Senior Citizens Minister Ruth Dyson promised an Age Concern conference that “policy proposals are being developing for Cabinet consideration,” and that action would shortly be taken.

That hasn’t happened. This week Minister for Public Trust Jim Anderton also promised action on the law, although – again – no time frame was given.

The problems with the current law, according to the Law Commission, are:

A lack of monitoring of whether, on signing over the power, the donor actually understood what he or she is signing
  • Legal advice is not mandatory
  • No requirement for the attorney to file accounts, and no requirement for independent monitoring of the attorney
  • Limited powers for the Family Court to intervene. Enduring powers of attorney can be general or specific and it differs from an ordinary power of attorney in that it continues to be valid even if the person making it loses their legal capacity. They come in two forms: personal property and personal care and welfare. The first kind can be have a specific nominated date ”the second kind comes into effect only after the donor has become incapacitated, and can only be given to one person.

    There have been cases, the commission reported, of enduring powers of attorney being used to cover outright embezzlement, removal of property, and a failure to put the donor in care when needed so as to not reduce the value of the donor's estate.

    Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

    « Risks in setting up own trust companiesTax of death and asset distributions to be clarified »

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