Nick Bruining: How enduring powers of attorney, enduring powers of guardianship and health directives work

When a new client presented financial planner Sandra Carr with what she thought was a simple question, the experienced adviser knew in an instant there was trouble ahead.

There was no enduring power of guardianship in place.

While many people are aware of enduring powers of attorney, an EPG — and possibly one other document — are just as important.

In this case, the client held an EPA appointing her to look after things for her mother. It was a move into aged care that presented big problems because there was no EPG.

“There’s often misunderstandings about the powers that come with an EPA,” Ms Carr said.

“It’s not all-encompassing, and the limitations become very apparent when you want to help someone in a very personal way.”

Citizens Advice Bureau chief executive Dion Dosualdo said his organisation prepared about 400 EPAs a year.

“Some people come in just asking for an EPA but we encourage people to look at the ‘critical three’,” Mr Dosualdo said.

“These are the documents that any person of any age should consider — a will, an EPA, and an enduring power of guardianship.”

That can also extend to an advanced health directive that sets out what medical interventions and treatments you would want, if you were unable to express your wishes at the time.

Ms Carr said there was confusion about what document or “instrument” did what.

“Enduring powers of attorney allow someone to act on your behalf if they’re incapacitated. These instruments are extremely powerful and, sadly, they’re also the tool most used by those abusing elders,” she said.

EPAs can be used to open and close bank accounts, sell real estate, and make changes to superannuation. Having two people acting on your behalf can provide a level of protection against abuse.

EPGs and AHDs are both important lifestyle-type documents.

“These legal instruments provide instructions on how you want to be looked after and who can make the necessary decisions if you are unable to,” Ms Carr said.

An EPG, for example, is the instrument that would have allowed her new client to place her mother into residential aged care.

Medical decisions can generally be made using an EPG, but the directions in an advanced health directive can override a guardian’s decision.

Blank EPA, EPG and AHD kits can all be downloaded for free via wa.gov.au. Simply type the document name into the search box.

While that might suit some families, Mr Dosualdo warned people should not underestimate the importance of preparing the documentation exactly as required.

“There are strict legal requirements for an EPA and EPG to be legally valid,” he said.

“This means that, potentially, at the time when the attorney needs to exercise their powers, that because the instrument is defective, the individual has no legal representative or guardian.”

A competent solicitor drafting your will can also assist in preparing these other documents.

In the event that the documentation is defective or has not been completed, the issue can be referred to the State Administrative Tribunal to establish legally binding authorities to act on someone’s behalf.

“Contrary to common belief, no family member or friend automatically has the right to step in,” Mr Dosualdo said.

“In such circumstances, someone needs to make an application to SAT, to have SAT legally appoint an individual or, if there is no one, then the Public Trustee and the Public Advocate may need to be appointed.”

Family members should be very careful acting on behalf of someone who has lost the capacity to look after themselves.

This might be the case where you have PIN numbers and logins and passwords for a loved one. Without the supporting enduring documentation or SAT orders, your implied authority to use these stops when the person loses capacity.

Potentially, criminal charges could follow if any misrepresentations are made.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association