Power of Attorney – What You Need to Know
A Power of Attorney is a document that appoints another person to act on your behalf and make decisions in relation to your property and financial affairs. This is a very serious responsibility that should not be taken lightly. As such, the person you choose to appoint as your Attorney should be someone you trust to act in your best interests.
You do not need to appoint a lawyer as your Attorney. However, whoever you do appoint must be over the age of 18 years. It’s a good idea to appoint someone who has some experience with the type of financial affairs you want them to manage. For example, if you want someone to be responsible for buying or selling shares for you, you should not appoint someone who does not have any experience in that area.
There are two types of a power of attorney:
- A general Power of Attorney is useful for short term appointments, such as when you are going overseas and need someone to manage your financial affairs for that time. A general Power of Attorney automatically ceases when you lose the mental capacity to make decisions.
- An enduring Power of Attorney is the most common form of Power of Attorney and it remains in force even after you lose the mental capacity to make decisions. An enduring Power of Attorney is most common in circumstances where you are elderly and in poor health, and you want someone to manage your affairs indefinitely.
What can someone with a Power of Attorney do?
A Power of Attorney gives the appointed person authority to manage your property and financial affairs according to your instructions. For example, a Power of Attorney may collect debts or rents, pay your bills, or sign documents on your behalf.
Even if you grant someone power of attorney, this is strictly reserved for financial affairs: they cannot make decisions about your health, lifestyle or medical treatment. Only an enduring guardian can make those decisions – this is a separate appointment.
Why make a power of attorney?
A Power of Attorney can be useful in the event or circumstances that you are unable to make decisions about your financial affairs or assets. It can be as simple as if you are going overseas and want someone to pay the bills and manage your finances. Alternatively, you may be unwell and want someone to make those decisions for you until you get better.
Appointing an attorney is a good idea, particularly if you are elderly and wish to get your affairs in order. If you are suddenly unable to manage your financial affairs, and you do not have a power of attorney, there may not be anyone to manage your finances. This is not something that is covered by a Will. While Wills are very important, a Will dictates how your property and other assets will be distributed after your death, whereas a Power of Attorney manages your affairs while you are alive.
Your Power of Attorney can be drafted to only allow the appointed person to have control of one side of your financial affairs, i.e. only have access to one bank account and only pay your bills. It can also be tailored to automatically terminate at a certain point, which may be useful, particularly if you are going overseas.
Appointing a Power of Attorney is a practical way to ensure your affairs are in order when you may not be able to manage them yourself, either due to practical circumstances or your own ill health. By appointing one before you need to, you will save yourself further complications down the track.
Our solicitors are experienced in drafting Power of Attorney documents and can work with you to ensure the document is written in a way that accurately represents your wishes.
Are you looking for an experienced estate planning solicitor in Newcastle, Sydney or the Hunter to assist you in your legal matter? Call us on (02) 4929 7002, email us or complete an enquiry form.