Decision Making:  Who decides when you no longer can?

Written by Katrina Kendall, a Senior Solicitor at Wynyard Wood in our Warkworth office.  If you would like to discuss anything in this article further, please contact her on 09 422 2186 or katrina@wynyardwood.co.nz

We spend the majority of our adult lives in charge of our own activities, and often we have responsibilities for other people, companies or trusts. 

What happens if you lose mental capacity (temporarily or permanently), and are no longer able to manage your own affairs?  People of all ages should consider reviewing their affairs and putting in place a plan for somebody else to be able to handle their affairs.

So, what sort of plan can you come up with?  The key thing to remember is that a plan is best made before you lose mental capacity.  If you lose mental capacity without having a plan in place it is likely your family will need to involve the courts to be able to assist you.

To manage things that you might own in your personal name, you can put in place documents called Enduring Powers of Attorney (in respect of Property, and/or Personal Care and Welfare).  These documents allow somebody else to sign and make decisions on your behalf if you are no able to do so.  You can only put these documents in place whilst you have mental capacity.

If you are trustee of the Trust, you should check the provisions of the Deed of Trust.  Most Trusts require unanimous approval of all trustees for decision making, so if one trustee has lost mental capacity this can create a real problem.  The High Court can make orders if needed – but this is a costly process.  It is often preferable for trustees to retire earlier rather than later.  A Deed of Delegation of trustee powers can assist in the limited situations if a trustee is temporarily physically incapacitated, or travelling outside of New Zealand

If you are the director of a Company, you can check the provisions of the particular Company Constitution (if there is one).   Depending on the structure of the Company, other shareholders may have the ability to remove you as director.  If you are a key person involved in the day to day running of the company it is a good idea to have an agreement in place with your co-directors and shareholders as to what will happen should you no longer be able to carry out your role.

Once you have a plan it is a good idea to review your plan every 5-10 years to check that the people you have appointed are still appropriate.  Whilst some of us never lose our mental capacity, we just never know for sure whether we will or not. Creating a plan in advance can pay for itself many times over and make things a lot easier for your partner and family.