Enduring Powers of Attorney explained
A lot of people have heard of a Power of Attorney however, most do not fully appreciate the extent of its power, the benefits it delivers, or the types of Powers of Attorney.
A Power of Attorney is a useful legal document used to allow someone to handle their affairs in a variety of circumstances. It is often used if they are planning to go overseas, take an extended holiday, suffer from poor health or have an accident. It can also be useful when a person has reached a stage in their life when greater assistance is required to manage their personal affairs.
In this article we examine why appointing a Power of Attorney is so strongly recommended by lawyers and explain the difference between a General Power of Attorney and an Enduring Power of Attorney.
Selecting a person to act in your place
The appointment of your Attorney enables that person (or people) to act in your place and do the things you would normally do yourself; such as signing documents, paying the bills and doing the banking. The person you choose, your Attorney, has the right to represent you even to the extent that they can enter into agreements in your name and on your behalf.
Therefore, as a result of the power of the appointment, it is critical that you select the right person to act in that capacity. The person does not have to be a lawyer. In fact, it is important for the person to know you well and for you to trust them. It is often a trusted family member but whoever it is must be over 18.
The difference between a General and an Enduring Power of Attorney
Not all Powers of Attorney are the same.
A General Power of Attorney is a legal document that gives the Attorney the authority to make decisions about financial and legal matters, on behalf of the person who appoints them. This power lasts only for as long as the person who appoints them has mental capacity. The general power ceases to operate if the person that has made the Power of Attorney loses the capacity to make decisions. A General Power of Attorney is often used as a tool of convenience. For example, a person might appoint a General Power of Attorney to look after their financial and legal affairs in Australia while they travel overseas.
An Enduring Power of Attorney is similar to a General Power of Attorney except that the powers continue, or endure, in the event the donor loses mental capacity. In New South Wales, a document appointing an Enduring Guardian can be used alongside an Enduring Power of Attorney to authorise medical and health decisions. An Enduring Power of Attorney, unlike the General Power of Attorney, must be explained to you by a prescribed witness, that is, a lawyer. It is important to be aware that an Enduring Power of Attorney becomes void when you die.
What happens if you lose capacity without having a Power of Attorney?
The probability that someone can lose capacity is often not properly considered by people. However, if you do not have an Enduring Power of Attorney and develop a mental incapacity, you are therefore unable to manage your financial affairs. It is too late then to have a lawyer prepare such a document as you do not have the capacity to sign it.
The difficulty is that no person automatically has the right to manage your assets; not even if they are your husband or wife. This, therefore, has a colossal effect on all the financial decision-making thereafter especially with bank accounts and jointly-owned assets and liabilities.
To have decisions made in these circumstances would then involve an application to the NSW Civil and Administrative Tribunal (formerly the Guardianship Tribunal). The applicant, usually a family member, would apply to become your financial manager subject to that person being deemed ‘fit and proper’ by the Tribunal. Failing this, the Tribunal may appoint the NSW Trustee and Guardian to manage your affairs.
If the NSW Trustee and Guardian is appointed, your spouse may need to consult with a government department to deal with your ongoing financial decision making until your death.
When does the Attorney’s power begin?
You may nominate when your Attorney’s power is to begin. If you do not name a date or an occasion, it begins immediately. On the other hand, if you lose the capacity to make such decisions before the date or occasion you name, the power begins at that point.
It is important to note that even if you give your Attorney power immediately, you may also continue to make decisions yourself while you are able to do so. By providing a Power of Attorney, you do not restrict or give up the right to make financial decisions.
Powers of Attorney are used as a precautionary step by sensible adults. Professional groups such as accountants and lawyers, all strongly recommend that their clients make a Power of Attorney to protect their assets (if a person loses legal capacity), and prevent their loved ones being put through unnecessary stress.
If you or someone you know wants to know more don’t leave it to late, please contact us on 02 9955 6692 or email email@example.com