Enduring Power of Attorney and Enduring Guardianship
Most households and businesses are familiar with a Power of Attorney. This type of document allows you to appoint one or more persons to manage legal and financial decisions on your behalf. It is commonly used by individuals who may need somebody else to deal with their property or assets on their behalf, or by businesses who may want to ensure that somebody is always available to sign contracts or manage bank accounts and bills. Many people engage a Power of Attorney on a temporary or permanent basis when they travel or move overseas, or end up in hospital after an accident. The individuals or businesses who engage a Power of Attorney are often called the ‘principal’. A Power of Attorney can be crucial at certain times in life and business. However, it is important to think beyond a Power of Attorney when engaging in comprehensive estate planning. This is where an Enduring Power of Attorney and an Enduring Guardian should be considered.
Power of Attorney vs Enduring Power of Attorney
A Power of Attorney is the first option for a principal to obtain assisted legal and financial management. It can be revoked by the principal at any time. If it is never revoked, it will cease to have effect upon the mental incapacitation or death of the principal. The principal still maintains control of their financial affairs, but the Power of Attorney will have the necessary authority to manage legal and financial management in accordance with the principal’s directions. If the Power of Attorney will deal with the principal’s real estate, then they must be registered with the NSW Land Registry Services. A Power of Attorney must sign the acceptance clause, which indicates that they will act in the best interests of the principal, keep records of dealings, and keep their personal assets separate. Any substitute Powers of Attorney must also sign the acceptance clause. If the Power of Attorney is permitted to benefit from the position, this must be expressly authorised by the principal. The Power of Attorney must be witnessed.
An Enduring Power of Attorney is the second option for a principal to obtain assisted legal and financial management. It can be revoked while the principal maintains the ability to make decisions for themselves. However, if the principal loses the capacity to make their own decisions, an Enduring Power of Attorney will persist until the death of the principal, at which time it ceases to have effect. Then, the Executor will administer the principal’s estate. If the Enduring Power of Attorney will deal with the principal’s real estate, then they must be registered with the NSW Land Registry Services. An Enduring Power of Attorney must sign the acceptance clause, which indicates that they will act in the best interests of the principal, keep records of dealings, and keep their personal assets separate. If the Enduring Power of Attorney is permitted to benefit from the position, this must be expressly authorised by the principal. Any substitute Powers of Attorney must also sign the acceptance clause. The Enduring Power of Attorney must be witnessed.
Guardianship is an option for individuals who are looking to appoint somebody to make health, lifestyle, and medical decisions on their behalf. It is a difficult but necessary decision to appoint an Enduring Guardian. This way, the choice of Enduring Guardian is not left to the circumstances of family members and other people close to the individual at the time that help is required. A trusted person should be selected as the Enduring Guardian, and this should be discussed with that person in advance of appointment. Unlike the Powers of Attorney discussed above, Guardianship only takes effect at the time that the principal loses the ability to make health, medical, and lifestyle decisions. There are some exceptions to allowable decisions, including those that have particular implications for fertility and pregnancy.
A principal may appoint different people to be an Enduring Power of Attorney and an Enduring Guardian. A principal may otherwise appoint the same person as the Enduring Guardian and the Enduring Power of Attorney. That person will then be able to make all financial, legal, healthcare, and lifestyle decisions on the principal’s behalf while the principal is alive.
When appointing multiple Powers of Attorney, Enduring Powers of Attorney, or Enduring Guardians, the principal must outline whether these are appointed together, or on a joint basis; separately, or on a several basis; or both. If they are joint, then they must agree before making a decision. If they are several, then they can make decisions without agreement. If they are joint and severable, they can elect whether to come to agreement or whether they can make decisions separately.
It is important to note that appointing a new Power of Attorney, Enduring Power of Attorney, or Guardian does not automatically revoke the rights of any previous appointments. If it is intended to revoke earlier appointments, this should be specified in the new appointment. Prior appointments should be notified in writing.
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