What is a Power of Attorney?
A Power of Attorney (POA) is a legal document that allows one or more individuals to manage a person’s financial and legal affairs while they are alive. The person or persons appointed as the attorney may be responsible for tasks such as managing bank accounts, paying bills and expenses or handling property transactions on behalf of the principal (the person who has appointed them).
A Power of Attorney comes into effect when a person is unable to make financial decisions on their own. This could be due to physical or mental incapacity, preventing them from understanding or communicating their intentions regarding property or financial matters.
By putting a Power of Attorney in place you not only safeguard your financial and legal interests but also lessen the burden on your loved ones during difficult times. This can help prevent financial mismanagement, disputes and delays that might arise if decisions need to be made without your input.
What are the types of power of attorney?
There are two main types of Power of Attorney in Australia:
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General Power of Attorney
A temporary arrangement, usually put in place for a specific period. For example, if someone is undergoing surgery or traveling overseas, they may appoint an attorney to manage their affairs for a short time.
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Enduring Power of Attorney
This type of POA remains in effect even if the principal loses capacity and can no longer make decisions for themselves. It ensures that financial matters continue to be handled in their best interest.
Who should I choose as my Power of Attorney?
It is crucial to appoint a trusted individual or organisation as your Power of Attorney – someone you have complete confidence in. Before making a decision, consider the following:
- Ensure the person is willing to take on the role and understands their responsibilities.
- Discuss your financial preferences and expectations with them.
- Choose someone who is reliable, financially responsible, and capable of making sound decisions on your behalf.
What are the responsibilities of a Power of Attorney?
A Power of Attorney is responsible for handling all financial decisions on behalf of the principal when required. This may include:
✔ Paying bills and managing expenses
✔ Handling bank accounts and superannuation
✔ Managing property transactions
✔ Signing legal documents
The appointed attorney must always act honestly and in the best interests of the principal. Their duties include:
- Keeping accurate financial records of all transactions.
- Ensuring the principal’s money is kept separate from their own.
- Making decisions that align with the principal’s wishes and best interests.
What if I want to change my Power of Attorney?
Circumstances change, and you may no longer wish for your appointed attorney to act on your behalf. If you want to revoke or change your Power of Attorney, you should:
- Inform your lawyer immediately so they can update your records and ensure the original document is revoked or destroyed.
- Ensure you still have legal capacity to make this decision – meaning you are mentally capable of understanding the change.
If you are considering changing your Power of Attorney, we strongly recommend seeking legal advice as soon as possible.
Does the Power of attorney cease at death?
Yes, a Power of Attorney ceases to have effect upon the principal’s death. Its sole purpose is to protect the principal’s financial interests while they are alive. Once the principal passes away, the Executor named in their Will takes over responsibility for managing their estate.
Who can witness a power of attorney?
The document must be signed by a legal professional, which is typically the person who drafted the document, and witnessed by an authorised individual such as another legal professional or the Local court registrar.
Should you register a Power of Attorney?
Whilst registration is not mandatory, you can register an Enduring Power of Attorney at the NSW Land and Registry Services so that your attorney can make decisions regarding real estate on your behalf.
What is a medical Power of Attorney?
In Australia, a Medical Power of Attorney is known as an Enduring Guardian.
The key difference is:
- A Power of Attorney deals with financial and legal matters.
- An Enduring Guardian makes health and lifestyle decisions if the principal loses capacity (e.g., choices about medical treatment, living arrangements, and personal care).
Both documents work together to ensure your affairs are managed effectively should you become unable to make decisions.
Need advice to set up a Power of Attorney? Contact Orman Solicitors for expert legal guidance.
Disclaimer: The content presented in this article is offered for informational purposes and should not be construed as legal advice or a substitute for professional guidance. If you have questions or require legal assistance, we strongly recommend consulting with a Solicitor to address your individual circumstances.