Your Power of Attorney is a legal document which appoints one or more people to look after your financial affairs on your behalf while you are still alive.
There are several different types of Powers of Attorney, and it is important that you get the right one.
By creating the Power, you are entrusting those people to access your property, assets and bank accounts on your behalf. Laws govern the conduct of Attorneys and impose legal duties on the Attorney to act in your best interests. However, you should think carefully about who you appoint and make sure it is someone that you trust.
Powers of Attorney come in several types. You should check your own Power of Attorney document to ensure that you fully understand its effect.
General Power of Attorney
The General Power of Attorney gives the appointed Attorney the power to look after your financial affairs on your behalf, but only while you are alive and still have full mental capacity.
Enduring Power of Attorney
The Enduring Power of Attorney gives the appointed Attorney the power to look after your financial affairs once you lose mental capacity. For example, if you suffer from Alzheimer’s disease and are no longer capable of making financial decisions.
In this situation, the appointed Attorney must obtain a declaration that you have lost mental capacity. Once that is done, he or she is free to take over your financial affairs.
General and Enduring Power of Attorney
The General and Enduring Power of Attorney is the broadest type of financial Power of Attorney. It combines the above two powers.
A General and Enduring Power of Attorney will come into effect straight away. It means that the person appointed has the power to act on your behalf at any time, including if and when you later lose mental capacity.
How far does an Attorney’s power stretch?
A power of attorney is a very powerful document.
Your attorney cannot make a Will or vote on your behalf, but can have wide powers in relation to things such as:
- Selling any real property that you own;
- Mortgaging your property;
- Investing your money; and
- Collecting rental payments on your behalf.
What should I think about before making a Power of Attorney?
Before making a power of attorney, you should consider the following:
Who will you appoint as your attorney?
- Will you appoint more than one attorney?
- Is the person you are thinking of trustworthy and responsible?
- Do you trust them to be organised and act wisely in making financial decisions on your behalf?
- Do you trust them to keep detailed and accurate records of what they do?
- Will they act in your best interests?
- Do they have a good relationship with others that will be involved in your ongoing care and lifestyle?
What limitations or conditions will you place on the powers you give to your attorney
- You don’t have to give blanket powers to your attorney.
- If you appoint more than one attorney, you can include a condition that they must make decisions jointly.
- You may want to include other limitations, such as restrictions on how your money can be used or prohibiting the sale of certain assets.
- You may want to structure your power of attorney documents so that certain aspects of your affairs are handled by different attorneys (for example, you may want your business affairs handled by a trusted business partner, but your spouse to handle your personal finances). This can get a little bit messy so it’s best to get some professional advice in this situation.
When do you want your Power of Attorney to become effective?
- You may want to continue handling your own affairs and only have your Power of Attorney become effective when you lose capacity.
- Alternatively, you may want someone to be able to step in immediately or during a specific time period. This is common when someone is travelling overseas and needs someone to sign documents or attend to certain transactions in their absence.
Where do you want your Power of Attorney to be effective?
If you hold assets in different States or countries, you will need to make sure that your Power of Attorney documents will be effective according to the local laws. If this applies to you, it’s best to get some advice to make sure you’re covered.
A power of attorney is a very significant document and you need to be comfortable with the person or people you appoint as your attorneys and the power that they have over your affairs.
Call us on 1300 654 590 and we can help you get the right Power of Attorney in place or check that your existing Power of Attorney meets your current needs.
Click here to find out more about how we can help you with your Estate Planning needs.
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