The essential legal document – more practical than a Will

Mike and Cathy had been living in the home that Mike had purchased after his first marriage ended. For some time, Cathy had wanted to move to a new house. She thought a new property would feel more like their family home. So, despite the tough housing market, they decided to put the house on the market. They figured they would be buying and selling in the same market and so there shouldn’t be any real financial impact.

They listed their house and within three weeks, it had sold. They had also found the perfect family home for them and their boys and managed to arrange a contemporaneous settlement. They spent the next two weeks packing.

Two days before they went to the lawyers to sign the documentation, Mike sadly suffered a major stroke. The stroke left him not only paralysed down one side, but the doctors also said that his cognitive ability had been impaired, and it would be some time (if ever) before he would have capacity again. Cathy was devastated. Not only was she having to deal with this life changing situation, but they were only ten days away from selling one house and moving into another. The first thing the doctors asked Cathy was whether she had Mike’s power of attorney. Cathy did remember their lawyer talking about powers of attorney to them at one point, but it seemed like something that old people did. Mike was 58, but surely not old enough to need powers of attorney, they had thought.

Cathy gave the lawyers a call just in case there was something that she could do now. They confirmed that Mike didn’t have powers of attorney in place, but they were also concerned about the impending settlement of the sale of the property. The house they were selling was in Mike’s name only as he had owned it before his marriage to Cathy. That meant that he had to sign the documents, transferring the property to the new owner. There was no way around it. If he had powers of attorney in place, then the attorney would have been able to sign.

There was nothing to be done other than make an urgent application to the Court for orders appointing Cathy as Mike’s attorney. However, as Mike had adult children, they would need to be advised that Cathy was making the application, and consent to it. They were not happy that Cathy would then have full control over Mike’s financial affairs and instructed a lawyer to oppose the application.

The whole thing turned into a disaster, costing time and money, not only with the application to the Court, but the fact that Cathy couldn’t settle on the sale, or the purchase of the new property. It meant that she and Mike were left paying penalty interest to both the purchaser of the property they were selling and the vendor of the property they were purchasing.

If you die without a Will, then there is a process that is followed to deal with your assets. However, if you lose capacity and haven’t put in place powers of attorney, then you do need to make an application to the Court. This costs both time and money and depending on your family circumstances, can be much more complicated than it needs to be. It is also a misnomer that only the elderly need powers of attorney. Any one of us at any time could have an accident or medical event that causes a loss of capacity. If you haven’t already, get your powers of attorney in place today.