Plan Ahead Today, For Peace Of Mind Tomorrow.
Unexpected situations can arise at any moment, and without the correct legal documentation, they can quickly become complicated and costly. The following example highlights why.
Marie and Ken had been married for ten years. They both had adult children from previous marriages. They were now heading towards retirement and had decided to downsize. It wasn’t so much the size of the house, as the size of the grounds that was concerning them. They were also keen to travel a lot more and really wanted something that was a “lock and leave”. They put their home on the market and signed up for a town house which had been recently completed. They were excited to be moving to the next stage of their life together.
Three weeks before their settlement date for the sale of their property and purchase of the new one, Marie suffered a massive stroke. She was immediately admitted to hospital. She was all but unresponsive and while the doctors were confident that she would survive, they were not happy with the impact on her cognitive abilities.
Ken was beside himself, not just because of Marie’s condition, but also because of the impending move.
He called the lawyer who was acting on the conveyancing to let him know of Marie’s stroke. The lawyer’s first question was as to Marie’s capacity to sign the necessary documentation relating to the sale and purchase. Ken told him that there was no way that Marie would be able to sign anything, but he would still be able to go into the lawyer’s office and sign what needed to be signed.
The lawyer told Ken that unfortunately it didn’t work quite like that, that he could only sign on Marie’s behalf if he had been appointed her power of attorney. Ken knew that was not the case. He did remember that their previous lawyer had briefly mentioned enduring powers of attorney to them at one stage, but Marie and Ken had thought that they would think more about that when they had retired. They had thought it was more something for elderly people who were starting to lose capacity.
The lawyer said that as Marie didn’t have powers of attorney in place, an application to the court would need to be made to appoint Ken as Marie’s property manager so he could sign the documents for the sale and purchase. He explained that this was not a straightforward process given their family dynamics.
If Ken wished to apply, he would need to get the consent of Marie’s adult children, and they would need to have the opportunity to take their own legal advice.
He also explained that the Court would appoint a lawyer to act for Marie and that sometimes the process could be easy and other times it could be complex. Because the Courts were so busy it also could be a few weeks before a judge would even look at the application and it would most likely be looked at after their settlement date.
The process of applying for Ken to be Marie’s property manager ended up being slow and expensive. Not only was the application itself expensive, but because it didn’t happen before settlement date, Ken ended up paying penalty interest on both the sale and the purchase.
Enduring powers of attorney are one of the most important legal documents you can have. If you lose capacity without these in place, then someone has to make an application to the Court to be able act on your behalf, regardless of whether you are married, in a relationship, or own property jointly. This process can become even more expensive and convoluted depending on your family’s circumstances. As well as the enduring power of attorney relation to property, there is also one relating to your health and welfare, where you can appoint someone to make decisions about these things if you are not capable of making these decisions yourself.
I recommend that all my clients take the time to put these arrangements in place now, no matter their age or life stage. It’s a decision today that could make all the difference tomorrow.
If you feel you could use some specialist advice for your personal situation contact our Trusts & Wealth Protection Team.
