If this happens to you or your spouse, it can be very traumatic. If it happens to your spouse, you will most likely be in shock and grief too.
And it can cost you a lot of money if the paperwork is not in place.
Everyone should have an enduring power of attorney (EPA) as it is a crucial legal document.
When you make an EPA, you appoint someone to make decisions on your behalf if you are unable to cope for any reason. In most cases, people appoint their partner, but you must also appoint a third person in case your partner cannot (is deceased or out of action e.g. you are both in a bad car accident).
There are two types of EPA:
- One specific to your personal care and welfare.
- The other specific to your “property” - a legal term meaning your money, house, car etc - all of your assets.
Not a will
An EPA is for the living, and a will is for the deceased - quite different.
However, a will is a crucial document too, for many of the reasons given for EPA’s, and is usually cheaper to put in place than an EPA.
There have been many cases of elder abuse, so the third person you appoint should be someone you can trust completely.
One of my clients assured me at each annual review that he had a valid EPA. When he had a major stroke at age 85, we found he had appointed an old friend who was 95 and sadly had dementia.
Whoever you appoint, make sure he/she or his/her partner are much younger than you.
What about appointing your children?
This is usually fine, but think it over first. Do all your children get on well? Will Jimmy and Jan get upset if you appoint Joan and Johnny?
Is any one of them really short of money? If so, he/she might help them-self to yours.
What are their spouses like? Very often it is the in-laws that cause trouble over wills and mum or dad's possessions.
If in doubt, appoint a person outside the family. It can be anyone you trust implicitly, but choose carefully as they may need the wisdom of Solomon if your family has divergent views.
Your solicitor might be a good choice, but again make sure he/she or his/her partners are much younger than you. If your solicitor has a long serving bright and efficient legal executive assistant who you get on well with, you might be in the right place. Legal execs often “run the show” and make sure things get done, and on time.
Too many cases of elder abuse resulted in a recent government tightening up on the rules, and EPAs for a couple can now cost over $1,000.
Yes it seems costly, but the alternative is to apply to the courts after the event, which can take six months and cost $2,000 or more. Going to court at a bad time in your life will add more stress and cost at a time when you just don’t need it.
I always tell people I don’t mind bills, but I hate surprises - and so I recommend you ask for a cost estimate first.
It might be a good idea to make new wills at the same time, and maybe get a bit of a bulk discount.
If you are the spouse in good health and your wife/husband/partner is very ill, or has passed away, you will be in grief too.
The last thing you need when grieving is to find the paperwork is not in order, and everything is a complex hassle.
What can go wrong?
Just a few minutes here or there allowing for “what can go wrong” can save you a lot of heartache.
Supplied by Alan Clarke, financial & retirement adviser, & author. He also writes regular articles for the media and on line.
His second book “The Great NZ Work, Money & Retirement Puzzle” is now available.
You can buy it on line at www.acfs.co.nz