Closing the stable door in advance: enduring powers explained
You’ve got your lease secured, your shareholders’ agreement in place and the practice is running smoothly. But what about your personal affairs? Most business owners don’t realise that having the right documents in place in your personal life can leave your business and your family in a much more certain position if things go wrong. The most obvious matters to attend to are ensuring you have an up-to-date, valid Will and sufficient life insurance. However the documents often overlooked are enduring powers of attorney and guardianship.
It is important to note before we start that enduring powers of attorney and guardianship are State and Territory-based, so whilst the laws in each State and Territory are similar they are not identical. It is therefore important to seek legal advice in your home State or Territory as to the options available, and the signing requirements – for example, some States still require registration of powers of attorney and the payment of stamp duty. If you live near a State or Territory border, it may be that you decide to obtain these documents in both jurisdictions.
Handling your business and finances
Recently, we advised the family of a man who was paralysed from a stroke but legally competent. He was the sole director and shareholder in the company that ran the family’s business, which meant that he was the only person able to vote upon company resolutions or at directors meetings. Luckily, he had appointed his son as his attorney pursuant to an enduring power of attorney (EPA) (financial), which meant that his son could vote in his place as a shareholder. As such, his son was able to use the power granted to appoint himself an alternate director of the company and administer the business. Without the EPA, the family and the business would have had much more difficulty running the business and accessing bank accounts, and would most likely have had to apply to a court or tribunal to appoint an administrator to attend to the man’s affairs.
Each State and Territory has its own form of EPA (financial). However, generally you appoint one or more attorneys to make the financial and legal decisions that you would normally make. If more than one attorney is appointed, it is usual to have joint and several powers, which means that your attorneys can exercise the powers conferred together or separately.
You can limit or place specific conditions upon how you want your attorneys to carry out their responsibilities, or the powers can be general. You may wish to appoint one person to administer your bank accounts and another to sign legal documents, for example. The powers can begin immediately, upon the happening of a particular event or on a specified date and continue even if you become unable to make decisions in relation to financial and legal matters.
Looking after your medical treatment
Unlike the EPA (financial), a “medical treatment” EPA is not directly related to your business. However, it is useful to have one for your piece of mind and the sake of your family.
The “medical treatment” EPA comes into effect when you are unable to make decisions about your medical treatment (that is, you are incapacitated). This is particularly significant where you are on life support as it allows your agent to make medical decisions on your behalf such as refusing medical treatment.
A recent matter we dealt with involved a young woman who suffered a brain aneurism after a routine operation. The doctors wanted to continue treatment but told her family that if she were to survive, she would be in a permanently vegetative state. The young woman had always said she would prefer for her family to end life support in such a situation. The young woman had appointed her mother as her agent, and she was able to refuse further medical treatment on her daughter’s behalf.
As a general rule, your agent can only refuse medical treatment if the treatment would cause you unreasonable distress, or your agent reasonably believes that you would consider the treatment unwarranted. However, an agent cannot refuse palliative care. Again, each State and Territory has its own form of “medical treatment” EPA.
Assuring your lifestyle – appointing an enduring guardian
If you appoint an enduring guardian the appointment comes into effect when you are unable to make decisions, much like a “medical treatment” EPA. An enduring guardian has the power to make decisions about your lifestyle – for example, where you live, who can visit you or how your heath care should be maintained – subject to any limitations you place on those powers. If you lose legal capacity and an enduring guardian is not appointed, it is possible that your family may have to apply to your State or Territory’s administrative tribunal to have a guardian appointed – particularly if there is a dispute amongst the family in respect of the relevant decisions. This can be costly and may, for example, slow down your admission into residential care.
Whilst none of us want to think about the possibilities of accidents, medical emergencies and other exigencies, these possibilities can become unexpected realities in a heartbeat. Ensuring that you have prepared some simple legal documents in respect of such possibilities can make these events much easier for your family and your business, and in the case of your own medical treatment can ensure that your treating doctors comply with your previously stated wishes.
Out of necessity this article contains a general summary only and should not be relied upon as a substitute for our professional advice.