What Happens When a Person Loses Capacity?
It can be really difficult when a close friend or family member loses mental capacity. Often, losing capacity also comes with a change in lifestyle due to a loss of independence and increased vulnerability. It is important that we understand the legal process and how we can protect those closest to us when this happens.
When someone loses capacity, there are two types of decisions which they may be unable to make for themselves: decisions relating to their property and decisions relating to their personal care and welfare. A medical assessment will confirm whether someone has lost capacity, and if so, it may be necessary for another person to be appointed to make decisions on their behalf.
There are two ways in which a person can be appointed to act on behalf of an incapacitated person (known as the “donor” or “subject person”):
- Enduring powers of attorney (“EPAs”); or
- Family Court orders under the Protection of Personal and Property Rights Act 1988 (“PPPR Act”).
An EPA is a legal document which is only valid if signed prior to the donor losing capacity. There are also strict requirements about the form of EPAs and independent legal advice which must be provided to the donor prior to signing.
If a person loses capacity and has not signed EPAs or their EPAs are invalid for any reason, it may be necessary to apply to the Family Court for orders under the PPPR Act.
Under the PPPR Act, the Family Court can appoint a welfare guardian and property manager to make decisions in the best interests of the subject person. Welfare guardians make decisions about healthcare, accommodation, and day-to-day activities. On the other hand, property managers deal with the financial affairs including paying bills and managing investments on behalf of the subject person.
The PPPR Act sets out who can apply and the criteria for appointing welfare guardians and property managers, ensuring accountability and protection for those who have lost capacity. It is important that those being appointed understand their obligations and meet any review and reporting requirements throughout their appointment. Please note that appointments under EPAs and the PPPR Act cease immediately upon death of the donor or subject person.
There are many ways in which a person may lose capacity and it can be quite unexpected. For any advice in respect of EPAs, applications under the PPPR Act, or compliance with welfare guardianship and property management orders, please contact us.
Want to learn more?
Get in touch with our Wellington and Rotorua family teams, for personalised advice and to book a consultation.
