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September 2010

The Position is Slightly Improved

Recent changes relating to Enduring Powers of Attorney

Ever since 1989, when the Protection of Personal and Property Rights Act came into force, we have strongly recommended that all adults should have Enduring Powers of Attorney. The intent is to provide for the possibility of your failing health and a consequential inability to make decisions for yourself.

Until 2008, preparing and signing Enduring Powers of Attorney was easy and inexpensive. The Labour Government amended the Act to require legal advice to be given to the donor (the person granting the power) and for the lawyer to certify that such legal advice had been given. That was good. However, the changed law would not permit a lawyer from giving that legal advice to the donor if the lawyer or anyone in the lawyer’s firm had ever acted for the intended attorney in any capacity (such as a traffic offence 10 years ago).

The ridiculous result of that 2008 law change was that if the lawyer or the law firm had ever acted:

  • For both the husband AND the wife (which is extremely common) where they were to be each others attorney; or

  • For the parent or parents AND the adult child/children (which is quite common) intended to be the attorney/s; or

  • For the donor AND the attorney (which in our community is common)
    - the lawyer and the law firm could not give the necessary legal advice and certify the document even if the donor/s consented.

What then happened was predictable. The client was either faced with significantly higher legal costs and the need to visit another law firm for the legal advice OR the client chose someone else (not usually their first choice) to be their attorney.

Now the position is slightly improved with the passing of a new Amendment Act which came into force on the 7th July 2010. With the amendment, we can act for both the husband and the wife (or any other two parties) in providing the legal advice and certifying the Enduring Power of Attorney PROVIDED THAT they appoint each other as attorney and appoint no one else.

The law change does not assist in respect of other situations such as:

  • spouses or partners may wish to give enduring powers of attorney in favour of each other with an adult child (in the case of property) as co-attorney or with an adult child as successor attorney;

  • a husband may wish to give an enduring power of attorney in favour of his wife without a reciprocal power of attorney from the wife to the husband;

  • a parent may wish to give an enduring power of attorney in favour of adult children; and

  • a person may wish to give an enduring power of attorney in favour of a friend.
    - where the donor and the attorney have dealt with the same lawyer or law firm.

We understand that Parliament did not accept the submissions of the New Zealand Law Society to provide more flexibility with the providing of legal advice and certifying. We now have to wait until a Government review occurs in 2013.

Enduring Powers of Attorney are important. There is good reason for requiring legal advice. The 2010 changes improve on the 2008 situation slightly, but only just.