A Power of Attorney is a legal document that provides a person or trustee organisation you nominate with the ability to make and implement decisions regarding your finances and assets while you are alive. Despite the use of the term ‘Attorney’ in the USA and other countries to describe a lawyer / solicitor, in this context, ‘Attorney’ doesn’t mean the person has to legally qualified.
If you would like to authorise a person or trustee organisation to make lifestyle and health decisions for you, then you should consider appointing a Guardian, which is done via a separate legal document. Oftentimes, people implement a Power of Attorney and Guardian at the same time.
Why do I need a Power of Attorney?
First, even if you’re not sick or injured, a Power of Attorney is a helpful way of authorising someone to sign legally binding documents on your behalf, in your absence. For example, if you’re going interstate or overseas and know you are not going to be available to sign a document that needs to be signed, you can give someone Power of Attorney so that they can attend to signing the document in your absence.
Secondly, whilst no-one plans to get sick or injured or otherwise be in a situation where they cannot look after their own affairs, life doesn’t always go to plan.
Appointing a Power of Attorney is an important step in providing for your future. It’s a safeguard – you may never need to use it, but it will ensure that decisions relating to your assets and finances can be appropriately implemented should you be in a position where you can’t implement these decisions yourself, either by absence or ill-health.
Are there different types of Power of Attorney?
There are two different types of Power of Attorney – a General Power of Attorney and an Enduring Power of Attorney.
A General Power of Attorney ends when you either revoke the Power of Attorney, die or you lose the mental capacity to make your own decisions. If desired, you can appoint a General Power of Attorney for a specified time – for instance, using the travel example I provided above, appointing someone to manage your property for a limited period while you are overseas.
An Enduring Power of Attorney operates in a similar way to the General Power of Attorney, however, it remains in place even if you lose the mental capacity to manage your affairs.
What is my Power of Attorney’s role?
Unless you limit the Attorney’s powers, by stating the limitations in the Power of Attorney document, a Power of Attorney can do anything that you would usually do regarding your finances and assets. For instance, deciding how your money should be spent, selling or leasing your property and selling other assets such as your car or household contents. They can also sign legally binding documents on your behalf. You can put limitations in place depending on your preferences.
Your Power of Attorney must act in your best interests at all times and aside from any fees associated with using a professional advisor, they shouldn’t benefit financially from their role (unless you have provided for this in the document).
Records must be maintained as to any decisions and actions undertaken by your Power of Attorney. They must also keep all of their finances and assets separate from yours.
If your Power of Attorney fails to fulfil their obligations, civil/and or criminal penalties can apply.
What should I consider when choosing my Attorney?
Selecting a Power of Attorney is a decision that you shouldn’t make lightly.
The person or trustee organisation you choose must be someone that you trust because should they need to step into the role, they will be able to make very important decisions regarding your assets and finances. Given the seriousness of the role, you should ensure that your chosen Power of Attorney is responsible and has proven experience.
Your Power of Attorney must be over 18 years old. Many people choose a family member or friend. You should make sure that you have a discussion with them regarding your decision and their role. Make sure that they are aware of the legal repercussions of not fulfilling their obligations.
If you don’t want to appoint a family member or friend, there are several other options available. You can appoint the NSW Trustee & Guardian, a trustee company or an independent, professional advisor, such as a lawyer.
More than one Power of Attorney can be appointed. If you do appoint more than one, you need to decide and specify whether they will be able to act independently or can only act jointly.
When should I make a Power of Attorney?
Once you need a Power of Attorney, it’s often too late to implement. As discussed earlier, appointing a Power of Attorney is about protecting your finances and assets should you be in a position where you can’t. Given that most instances where a Power of Attorney are required relate to unforeseen circumstances, it’s wise to act sooner rather than later to put the necessary arrangements in place as a pre-cautionary measure.
When does a Power of Attorney start?
A Power of Attorney can start when it is signed or from a nominated starting date.
Can I update or cancel my Power of Attorney?
Provided that you have mental capacity, you can update or cancel your Power of Attorney. Unless you have appointed an Enduring Power of Attorney, it will terminate is you lose mental capacity. You must provide your Power of Attorney with a copy of the notice of cancellation.
A Power of Attorney can also be cancelled if the person you have chosen passes away, loses mental capacity, declares bankruptcy or resigns from the role.
Why is a legal professional necessary when making a Power of Attorney?
Appointing a Power of Attorney provides peace of mind. It also has serious legal implications – as it should, it gives another person or trustee organisation control over decisions that can impact you substantially. You should seek professional advice and a lawyer experienced in this area of law when making your decision and preparing your documents.
It is crucial that you fully understand what is in the document and the outcome, prior to signing. Given that this can be a contested area of law, it is important that the wording used clearly states your wishes. Ambiguity can lead to problems later! A legal professional will also ensure that your documentation is properly witnessed.
If you would like to discuss or have a Power of Attorney prepared, please contact me on 0402 136 083.
