Do I Need a Power of Attorney?

Date: Nov 01, 2009
Document Type: Newsletter

Powers of Attorney are documents that have been around for hundreds of years. Put simply, a Power of Attorney is a document whereby one person – the "donor" – gives another – the "attorney" – the power to sign legal documents on their behalf. They can be given by companies or individuals. For example, banks will sometimes appoint senior staff members to sign various specified documents on the bank’s behalf.

Historically, a Power of Attorney ceased to have effect if the donor lost their mental capacity but some years ago this was changed to allow a Power of Attorney to "endure", to continue to have effect even if the donor had lost capacity. An enduring Power of Attorney must state that it is to continue to have effect – or even that it will only have effect – if there is a loss of mental capacity, and there is a Certificate by a lawyer or other specified person as to the donor’s understanding.

These Enduring Powers are now commonplace; most professional advisors will recommend one when a client makes a will and, with the increasing risk of dementia, having one in place is a sensible precaution – once you have a loss of mental capacity it is too late!

Powers of Attorney are also of use if the donor is going overseas for some time. The chosen Attorney will be able to look after the donor’s affairs and sign whatever may be needed to be signed. Powers of Attorney can be narrow or wide; one can appoint another to enable a specific transaction only to be carried out or the Power may be very general.

An Attorney must only act in the donor’s interests and cannot receive any benefits unless this is provided for in the actual Power document. Mixing up the donor’s and the attorney’s funds is asking for trouble.

In Queensland, a Power of Attorney can deal with health and lifestyle decisions in addition to financial matters. However, in New South Whales and some other states a separate document known in formal terms as an Appointment of Enduring Guardian is required to oversee health and lifestyle decisions. This will only operate if the donor is unable to make the necessary decisions and typically the guardian can decide what treatment and services the donor received, give consent to medical and dental treatment, and decide as to where the donor lives. Many donors also include directions that they are not to be kept alive artificially in instances where life support is necessary to sustain life.

With both Powers of Attorney and Guardianships, there can be more than one appointee or substitutes named in case the original person is unable or unwilling to take on the position. With both documents, the attorney or guardian must accept the appointment in writing before using their authority and in the case of a Guardianship, that acceptance must be certified by a lawyer or other prescribed person.

With both Enduring Powers of Attorney and Guardianships, one hopes they will never be needed but if that need should occur, having them in place can be a great relief to a family.

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