Cathy’s health had recently started to deteriorate. She was in her late 80s and was still successfully living in her own home. However, her children had recently started to notice that she did not seem to be keeping on top of things as well as she used to. They arranged for her to have a St John’s monitor, as they were increasingly worried that she might fall, and they started to look at retirement villages for her. However, before they could make much progress on the village, Cathy had a stroke and ended up in hospital. Her capacity was immediately diminished.

When Cathy’s son, James, came to the hospital, staff wanted to know who held Cathy’s enduring power of attorney. James was not sure. He was fairly certain his parents had these in place because when Cathy’s husband had been in hospital before he died, Cathy was able to make decisions on his behalf as his attorney. James told the hospital that he would check with Cathy’s lawyer.
James got in touch with Cathy’s lawyer, who advised that unfortunately Cathy had never updated her enduring powers of attorney after her husband died. Their powers of attorney had appointed only each other, and there were no alternate attorneys. This meant that Cathy had nothing in place, and an application would need to be made to the Court for James to be appointed as Cathy’s property manager and welfare guardian, given that Cathy no longer had the capacity to make decisions for herself.
James let his sister, Susie, know that this was the process. She was happy for James to take on this responsibility, which was helpful as it would save costs and time if they were both on the same page. However, Susie did want to help find a suitable village for Cathy. It was no longer going to be feasible for her to live in an independent living apartment. They would need to find a care suite for her with hospital-level care.
Cathy and her husband had set up a trust many years ago, on the basis that if one of them went into care, they would qualify for the residential care subsidy. The trust owned the family home that Cathy had been living in and had enough in term deposits to pay for the care suite for Cathy. Cathy’s lawyer told James that, despite the trust, it was unlikely Cathy would qualify for the subsidy given the value of the family home. James and Susie were keen to keep the family home, at least until the real estate market improved. Their lawyer suggested applying for the subsidy and seeing what the Ministry of Social Development said.
The lawyer was right: MSD denied Cathy the subsidy, despite the family home being in the trust. However, their contact person did say that, if they took the property out of the trust and put it into Cathy’s name, they could apply for the residential care loan to help pay for Cathy’s care. The loan is an interest-free loan, payable on the sale of the property or Cathy’s death (whichever occurred earlier) and would be secured by a caveat on the property.
James decided to do that, but this brought its own complications because of Cathy’s lack of capacity. James’ father was still on the title to the property, as nothing had been done with the trust after he died. This made the process a little more cumbersome and expensive.

Cathy’s story shows how matters can become very complex and expensive if you do not review your affairs regularly, particularly after a change in circumstances. James and Susie could have been spared cost and delay if Cathy’s affairs had been in order.
When a loved one loses capacity, families are often dealing with enough emotional stress already. Keeping your legal affairs up to date can help ensure those closest to you are able to focus on supporting you, rather than navigating avoidable legal and administrative hurdles.

Tammy McLeod, Managing Director, Davenports Law