Incapacity – who would manage your interests in two (or more) countries?

If you are mentally incapacitated and unable to make decisions for yourself, or if you are unable to attend to decision making and document signing in person, who will manage your interests? This is a question that first, requires careful consideration by you, and second, requires you to choose and appoint, one or more trusted persons to act on your behalf under an “Enduring” Power of Attorney (EPOA). An EPOA is a Power of Attorney which remains effective even if you are incapacitated.

Ideally, if you hold assets in two (or more) countries, you should have an EPOA prepared in each country, and if you hold assets in more than one State in the U.S., then in each of those States. This would enable the persons you have appointed (your “attorneys in fact”) to easily effect transactions on your behalf without undue delays and costs.

This is important because many jurisdictions do not recognize a power of attorney that has not been prepared and witnessed in accordance with their specific legal requirements. Some States in the U.S. will not allow next-of-kin to act in the absence of an effective EPOA or alternatively, a court order.

The requirements for having an EPOA that has been prepared in one jurisdiction (for example, in Victoria, Australia) to be used in another jurisdiction (USA) that need to be satisfied can be time consuming and burdensome, and generally entail:

1. a lawyer in the U.S. reviewing the Victorian EPOA;

2. a lawyer in Victoria confirming that:

a. the EPOA is valid in Victoria;

b. the EPOA is sufficient in Victoria to effect the type of transaction that is sought to be effected in the U.S. – the EPOA must allow the attorneys in fact to act and achieve the same objective in Victoria as is sought to be achieved in the U.S. For example, if the attorneys in fact are seeking to sell or transfer a property in the U.S., they must be authorized under the Victorian EPOA to sell or transfer a property in Victoria; and

c. the principal under the EPOA is still living;

3. if the attorneys in fact are seeking to sell or transfer a property in the U.S., the EPOA would need to be recorded along with the property title / deed at the Register of Deeds office in the county in which the property is located in the U.S; and

4. identification and contact information of the Principal and attorneys in fact.

Our upcoming whitepaper International Estate Planning for U.S.-Australia cross-border clients which is due for publication in April 2020 provides an in-depth analysis of international estate planning issues.

If you have any questions, please contact:
Renuka Somers
Senior Tax Advisor
U.S. Australia Tax Desk