16 May 2020

Preparing for the unexpected the three acronyms you need to know

We’ve said it before, and we will say it again – a properly drafted Will is absolutely essential to spare your loved ones the heartache, stress, and disappointment that is so often attached to intestate estates.

Although many clients tell us they’ve been considering preparing a Will for a long time, but just haven’t gotten around to it – a risky thing indeed, but we take heart that Wills are nonetheless on the ‘to do’ list for many people – it is a far less common thing to hear from those who have considered what will happen if they are unexpectedly incapacitated and can no longer advocate for themselves.

Enter the EPA, the EPG and the AHD – the Enduring Power of Attorney, Enduring Power of Guardianship, and Advance Health Directive. These three very powerful, very useful documents can make an enormous difference to the management of your lifestyle and finances during your lifetime.

Many of us have heard of the Enduring Power of Attorney (“EPA”), but there are many misconceptions about how the EPA actually works. An EPA is a document that nominates one or more people to make decisions on your behalf in relation to your legal and financial affairs, during your lifetime – in simple terms, your money and assets. It ceases to have effect on your death, at which point your Will takes over. An EPA can be restricted, meaning that a declaration by the State Administrative Tribunal that you have lost capacity is required before the EPA can be used, or unrestricted, meaning that your attorney can make decisions for you about legal and financial matters immediately, regardless of your continuing capacity. It is also possible to have a hybrid of both with restrictions applying to some appointments and not others. Less commonly, you can also have an EPA that is restricted to only specific tasks – for example, appointing someone just to sell your house if you are overseas, and the EPA finishes once the house is sold.

Any EPA is vulnerable to abuse, but an unrestricted EPA especially so, and we always advise clients that who you chose to sit in this powerful position is one of the most important decisions you can make, and that an EPA is not to be made lightly.

What an EPA does not do is allow your attorney to decide where you will live, or what medical treatment you receive. That is the domain of your guardian, appointed by Enduring Power of Guardianship (“EPG”). Similar to an EPA, the EPG is a document that allows another person, nominated by you, to make lifestyle and health decisions on your behalf. The EPG only ever comes into force if you lose mental capacity (and so always requires a declaration to that effect).

The third of the during life documents (as opposed to the Will which is an after life document) is the Advance Health Directive (“AHD”). Sometimes known as a ‘Living Will’, this document allows you to refuse or consent to life sustaining treatment in the event that you are in a persistent vegetative state or make a variety of other decisions regarding your medical treatment. This document differs from the EPG in that while the EPG allows someone else to make decisions on your behalf, the AHD is a way of making those decisions for yourself, prior to any loss of capacity.

Why are these documents so important? Well, we never know what’s around the corner. In 2019, Cancer Australia estimated that the risk of being diagnosed with cancer before your 85th birthday was 1 in 2. Two out of every three people with an acquired brain injury, acquired their injury before their 25th birthday. 45% of Australians live with a mental illness.

Whilst these things in and of themselves are not determinative of capacity, they are sobering reminders that life is unpredictable and the opportunities we have to protect ourselves against the unexpected and get our affairs in order do not last forever either.

Andrew Bower began his legal career as a law clerk in 2008, whilst studying a Bachelor of Laws and a Bachelor of Commerce majoring in finance at Murdoch University.