Powers of Attorney Explained

A lot of people have heard of a Power of Attorney however most people do not fully appreciate the extent of the document’s power, its benefits or the types of Powers of Attorney that exist.

A Power of Attorney is a useful, and often, necessary legal document used to allow someone to handle your financial affairs in a variety of circumstances. It is often used if you plan to go overseas, take an extended holiday, suffer from poor health, have an accident or reach a stage in your life when you can no longer manage your own affairs.

In this article we examine why appointing a Power of Attorney or Attorneys is 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

By choosing or “appointing” an Attorney you are enabling that person (or people) to act in your place and do things you would normally do for yourself such as sign documents, pay bills and do the banking.  Once appointed, your Attorney has the right to stand in your shoes whenever you would like them to look after your affairs.

In reality, your Attorney (or Attorneys) can enter into agreements in your name and on your behalf. Therefore, it is critical that you select the right person or people to act with in that capacity on your behalf. The person you choose does not have to be a lawyer. In fact, it is important that you trust the person and for you to know each other well. Often people will appoint a close and trusted family member however an Attorney must be over 18 years old.

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 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.

However, an Enduring Power of Attorney does not enable your appointed person to make medical and health decisions on your behalf. In New South Wales, a document appointing an Enduring Guardian can be used alongside an Enduring Power of Attorney to make decisions about your health and medical treatment if you are unable to.

Further, an Enduring Power of Attorney, unlike the General Power of Attorney, must be explained to you by a lawyer.

It is important to be aware that both the General Power of Attorney and Enduring Power of Attorney will become void when you die.

What happens if you lose capacity without having a Power of Attorney?

The probability that we may lose capacity at some point in our lives is often not properly considered by people.  However, if you do not have an Enduring Power of Attorney and develop a mental incapacity, the people close to you will be left without legal authority to manage your financial affairs on your behalf. At that stage, it is too late to have a lawyer prepare the document as you will not have legal capacity to sign it.

The difficulty is that no person automatically has the right to manage your assets or financial affairs. Not even if they are your husband or wife. As a result, if you do lose capacity, the absence of an Enduring Power of Attorney document can create a number of problems in respect of financial decision making and management of your bank accounts, your jointly owned home, shares or other jointly owned assets or liabilities.

In these circumstances, a family member or close friend would need to apply to the NSW Civil and Administrative Tribunal (formerly the Guardianship Tribunal) to become your financial manager. However, their appointment would be subject to that person being deemed fit (as in a ‘fit and proper’ person) 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, family member or close friend may need to consult with a government department to deal with your ongoing financial decision making until your death.

When does an Attorney’s power begin? 

You may nominate when your Attorney’s power begins.  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 your own financial decisions.


Today, Powers of Attorney are usually used as a precautionary step by sensible adults in preparation for unforeseen events or old age rather than as a stop gap measure for an overseas trip.

Professional groups such as accountants, financial planners and lawyers all strongly recommend that their clients, of all ages and walks of life, make a Power of Attorney to prevent their assets from being locked up and to avoid causing their loved ones avoidable stress if they lose legal capacity.

If you or someone you know wants to know more, please contact us on (02) 8014 5885 or email info@nolanlawyers.com.au.

By |2018-10-29T14:12:03+10:00July 9th, 2018|Uncategorized|