Do young people need to have enduring power of attorney arrangements in place?

24 October 2015

Most New Zealand residents are able to execute enduring power of attorney (EPA) documents. In essence, these documents allow you to nominate people (“attorneys”) who can act on your behalf if you’re unable to. For example, if you’re in a car accident or have a stroke and are unable to communicate your wishes.

In New Zealand, there are two types of power of attorney documents: one that relates to your property (including your financial affairs), and another relating to your personal care and welfare (which covers things such as medical decisions). 

My view is that almost everybody should have EPA arrangements in place. There might be some instances where it’s not necessary, but I struggle to think of any. 

There are a number of benefits related to having EPA arrangements in place. It gives you certainty, in terms of knowing who would step into your shoes should something unfortunate happen. You can ensure that the person you choose is someone who is aware of your views about how you’d like to be treated, and is likely to act in this manner. 

In the event of something happening to you, it simplifies things considerably for your loved ones if you have EPAs in place. In the absence of having EPAs, to act on your behalf (particularly in relation to significant matters), authority needs to be granted by a court. This can take time, money, energy, and can create additional emotional distress at an already challenging time. There is a chance that the power that a person will be granted will be limited in some way. And there will almost always be strings attached to the powers granted that wouldn’t be in place if you’d simply had EPAs in place. 

(There is a common misconception that if you are someone’s “next of kin” you can act for that person if they’re unable to act. That’s not true. In a medical emergency, medical professionals might take your wishes on board, and act according to your wishes. And it’s likely that what you want to happen will align with what they would do. But things are likely to get more awkward over the long-run when lots of different options start to present themselves. Once you start trying to act for someone in relation to their personal financial affairs (especially for assets that they own on their own account) and entering into commitments on their behalf (including, for example, changing your accommodation arrangements), you’ll find that your status as next of kin will start to mean very little. You’ll need to be an attorney under an EPA or acting on the authority from a court-granted personal or property order.) 

Does anyone need an enduring power of attorney (EPA)?

Some people, perhaps, like people moving into a residential village that requires all residents to have EPAs in place. But for the most part, an EPA isn’t strictly necessary. As I’ve mentioned, your loved ones can apply for personal or property orders in relation to important decisions, albeit at increased cost and energy, as well as time delay.

The decision to have EPAs in place is a personal decision.

Having an EPA in place is a bit like having personal insurance. Whether it’s worth it to you is something you need to balance personally. Factors that will come into the equation include the cost, and your perceived probability of anything happening that would trigger the need for an EPA.

Certainly, as you get older, it becomes more important to have an EPA. The number one risk factor for most health issues (and even certain types of accidents) is age. So as the possibility of losing mental capacity (for whatever reason) becomes greater, the importance of having an EPA becomes greater.

But even if you’re young, having arrangements in place is a good thing to do. All else being equal, it’s certainly better than the alternative of not having EPAs. 

There are costs associated with preparing EPAs. You’re usually looking at a few hundred dollars (minimum, depending on your circumstances and what you want to set out in the documents) for a set of EPAs. And it will take some time, in terms of meeting with a legal professional and discussing what your wishes are. (Which is usually done at the same time as you prepare a will – but that is another conversation/article altogether…)

Personally: I’m fortunate that my family would almost certainly be on the same page in terms of who should act on my behalf should something unfortunate happen to me, regardless of whether I have an EPA or not. But I don’t want them to suffer any more added anguish or bother should something happen. I pay to have personal insurance in case bad things happen, and I see this as just another type of insurance to address this type of risk. 

I’m fortunate in another sense, in that it’s highly likely that the people I nominate now will be the same people I would nominate many, many years in the future. So why not get an EPA prepared sooner than later?

For me, it’s an easy decision. It’s worth paying the money to get an EPA prepared. 

Is having an EPA in place worth the cost and effort to you? 


EPAs, estate planning

About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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