This Basic Guide deals generally with common questions people have about Powers of Attorney, but you should really seek legal advice from one of our lawyers as Craddock Murray Neumann Lawyers before seeking to put a Power of Attorney in place.
What are Powers of Attorney?
A Power of Attorney is a legal document, by which you can give another person or an organisation the power and authority to make decisions about and to deal with your money, your property or your financial and legal affairs while you are still alive.
Because Powers of Attorney give an individual or an organisation the same power and authority that you have in relation to those matters, you must take great care in deciding who to appoint. You should only appointment someone who you would trust with such a responsibility and who preferably has the required knowledge and experience to act appropriately on your behalf. The appointee must be able to put your interests first and to not mix your interests with their own.
What kinds of Power of Attorney are there?
In New South Wales, Powers of Attorney are principally regulated under the Powers of Attorney Act 2003, which prescribes the form that Powers of Attorney must take to be valid. Under the Act, there are two prescribed types of Powers of Attorney, namely:
- A General Power of Attorney. This form of authority lapses on the earlier of the end date (if one is noted in the document) or the date on which you revoke it or when you lose mental capacity to make your own decisions and manage your own affairs.
- An Enduring Power of Attorney. This form of authority is like a General Power of Attorney, except that it is intended to continue operating and to remain effective even after if you have lost capacity due to illness or unsoundness of mind.
Each of these types of Power of Attorney can be drafted to include particular limitations or conditions or specific authorisations that you can impose or confer on your appointed attorney. For example, you can limit it to operating during a specified period of time, or you can restrict or specify the things that the attorney is authorised to do on your behalf.
Why have a Power of Attorney?
A General Power of Attorney can provide a convenient way to enable your legal, property or financial affairs to be looked after by someone you trust whilst you are for some reason unable to do them yourself (for example, if you are overseas or recovering in hospital).
An Enduring Power of Attorney provides the same convenience, except that it can be used if you lose the capacity to make your own decisions or manage your own affairs. So, for example, if you have had a major stroke or if you succumb to dementia and you are able to manage your own affairs, you will need a trusted person to stand in your shoes to look after such important matters.
If you have not appointed someone to act as your attorney and you lose capacity to manage your own affairs, it will cause delay and inconvenience for those who want to look after you and help with managing your affairs. If you haven’t appointed an attorney you trust, then someone will have to apply to be appointed as your financial manager. In NSW, the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) has jurisdiction in such matters.
It is obviously far better to have someone you trust already appointed by you in a position to step in without delay to do what is necessary on your behalf if you have lost capacity to manage your affairs.
Making an Enduring Power of Attorney is therefore a sensible, simple, and practical thing to do to prepare for the future. By making the appointment yourself, you can not only choose the person(s) you trust to act as your attorney, but you can decide whether you want to impose limits on what he, she or they can do.
When is the right time to make a Power of Attorney?
You should obviously make a Power of Attorney before the time comes when it will be needed. For example, if a document suddenly needs to be signed while you are overseas or sick in hospital, you could be unable to do so without a Power of Attorney already in place.
For example, in NSW you need to not only have a Power of Attorney bit must also be registered if you need to sign a contract or dealing relating to land.
It is also essential that an Enduring Power of Attorney is made whilst you have mental capacity to fully understand what you are signing. You cannot grant a Power of Attorney once you have lost capacity.
You can specify when a Power of Attorney starts operating. For example, it can start as soon as the attorney(s) have signed it, or it can operate only between specified dates, or it can operate only from the time when a doctor certifies that you have lost capacity to manage your affairs.
Who should I appoint?
Anyone over the age of 18 can act as your attorney. It is usually a close family member (e.g. your spouse), or it can be a trusted friend or professional advisor. You should always first speak to the person you want to appoint to see if he or she would be happy to act as your attorney and thus potentially have to assume responsibility for your property and financial affairs.
Instead of appointing a close relative or friend, you can also appoint the NSW Trustee and Guardian, or a professional trustee company. However, you should bear in mind these organisations (and other professional appointees like lawyers or accountants) will generally charge fees for acting on your behalf.
You can appoint more than one attorney to act. If you do so, you will need to decide whether they are to act jointly (when they all agree and all sign documents on your behalf) or jointly and severally (where anyone will be able to act independently of the others). You also need to consider what happens if one of your attorneys dies.
What is your Attorney authorised to do?
Depending on any limitations you might impose on their appointment, your attorney can generally do all things that you can legally do with your money and your assets. Your attorney may also be able tp commence or defend legal proceedings on your behalf in certain circumstances.
Your attorney can sell, lease or mortgage your property, sell your personal belongings, operate with your bank accounts and sell your shares.
An attorney is generally not permitted to do things that you do in a representative capacity (such as acting as a trustee or as an executor in a deceased estate).
An attorney is also not permitted to make personal decisions about your health and lifestyle, because the authority to make such decisions can only be conferred by appointing someone as your guardian. In NSW, that means a guardian appointed by you under an Appointment of Enduring Guardian authorised under the Guardianship Act 1987, or a person appointed by the Guardianship Division of NCAT or by the Supreme Court of NSW.
Other states in Australia have similar but different regimes to the one in NSW, although often they involve a power of attorney and guardianship appointment being made using one document. In Queensland, for example, an attorney can be appointed to make health and lifestyle decisions as well as property and financial decisions. Australian states are generally able to recognise appointments made under the laws of other states.
What are my Attorney’s obligations?
An attorney appointed to look after your affairs has a duty to act in your best interests. They must not seek to obtain any benefit for themselves or confer benefits on others unless this has been specifically authorised by the Power of Attorney document.
An attorney you appoint must:
- keep his or her own money and assets separate from your money and assets;
- keep proper accounts and records of how he or she deals with your money and assets; and
- act honestly in all dealings involving your legal and financial affairs.
The attorney is ultimately accountable to you and to the relevant court or tribunal and can be liable to civil and/or criminal penalties if he or she does not carry out those obligations in accordance with those legal duties.
Can a Power of Attorney be cancelled or revoked?
You can revoke or cancel a Power of Attorney at any time if you still have capacity to manage your own affairs. You must give written notification to the attorney if you revoke their appointment, so that he or she knows that their power has been revoked.
A Power of Attorney is also cancelled automatically if the attorney dies, resigns, becomes bankrupt or loses mental capacity.
A Power of Attorney you have made will also cease when you die. The attorney does not have authority to deal with your affairs after your death. That role is performed by the executor you appoint in your Will (or by an administrator appointed by the court if you die without making a Will).
For more information on how our Wills & Estate Planning lawyers can help you with your Power of Attorney, please contact our team at craddock@craddock.com.au.