What is a power of attorney?
A Power of Attorney grants another person the legal authority to make important financial and legal decisions on your behalf if an accident or illness means that you do not have the capacity to make the decision yourself.
A Power of Attorney is as important for life planning as making a Will. Many people prepare a Will but do not give the same consideration to appointing a Power of Attorney until it is too late.
Your Power of Attorney can be revoked at any time provided you have the capacity to do so.
A Power of Attorney ceases when you die. The executor named in your Will then takes over the responsibility of administering your estate.
Circumstances when a Power of Attorney is particularly useful:
- to relieve yourself of the day to day demands of financial paperwork and record keeping;
- as a safety net when travelling or to allow someone to handle your affairs in your absence;
- to avoid burdening family or friends with the responsibility of looking after your affairs; or
- if you are unable to manage your financial affairs.
Does the Attorney need to be a lawyer?
The person you appoint as your attorney does not need to have legal qualifications- you can appoint anyone although the person appointed should be done with careful thought as you are providing them with considerable power.
An ideal attorney should:
- have integrity;
- be willing to act in that capacity;
- have competence in areas of relevance;
- be able to act in a professional manner;
- be able to spare the time necessary for the task;
- live in the state in which they are to act;
- keep their finances separate from the donor’s finances;
- be agreeable to respecting the confidentiality of the donor’s affairs; and
- be impartial and have no known conflict of interest.
Are there different types of Powers of Attorney?
Yes, there is a General Power of Attorney and an Enduring Power of Attorney.
A General Power of Attorney is:
- only valid while you have legal capacity;
- useful if you are going away for an extended period and you do not want the authority to continue should you lose legal capacity; and
- usually drawn up for a specific purpose with specific or general powers for example, bidding on a purchaser’s behalf at an auction if they are unable to attend in person.
An Enduring Power of Attorney:
- continues to be valid even if you lose legal capacity due to disability or illness;
- may empower your attorney to make financial, property, lifestyle and health decisions;
- may be activated when required or upon loss of legal capacity; and
- allows your attorney to commence or to continue to manage your affairs even though you have become unable to give lawful instructions.
Is it better to have more than one attorney?
We recommend that you do have more than one Attorney as it gives you more flexibility and certainty. You might like to appoint a primary attorney and an alternate, if your primary attorney dies or cannot act.
You can also appoint attorneys to act “jointly” or “severally”. If you appoint them to act jointly then they must make decisions and sign documents together. If you appoint them jointly and severally, then one or both of your attorneys will have the power to make decisions and sign documents.
You can state that your attorneys will continue to have the power if one of the jointly attorney dies or cannot act. This also applies if you appoint a spouse and a child as an alternative in the event the spouse dies.
Should I pay my attorney?
This is not necessary to give legal affect to the power, and for a financial power would normally only be considered if the attorney(s) is a professional.
How do I know if the person has sufficient mental capacity to make a power of attorney?
There is no simple formula, but in general terms they must be able to:
- understand the major consequences of a decision;
- take responsibility for making that choice; and
- make a choice based on the risks and benefits that are important to them.
If there is any doubt about capacity, it’s best to get in touch with a doctor and ask for a written opinion. If this is done it is wise to have the Power of Attorney signed on the same day as you obtain the medical report so there can be no subsequent claim that the appointment was invalid.
The need for a Power of Attorney can be numerous. In case of accident, sudden illness, planned or unexpected absence, or when you just can’t cope, you may need someone to manage your financial affairs. It doesn’t matter if you are old or young, in business or not, if you do a lot of travelling or not, there are benefits in having a Power of Attorney.
To find out more about Powers of Attorney and their benefits call us on (02) 8014 5885 or email email@example.com.