Power of Attorney
A Power of Attorney is a powerful legal document that allows your financial and legal affairs to be handled by a trusted person if you are unable to manage these matters yourself. Properly understanding the role of a Power of Attorney is key to protecting your interests and providing peace of mind for you and your loved ones in New South Wales.
What is a Power of Attorney?
A Power of Attorney is a legal document that allows you to appoint another person, known as the attorney, to make legal and financial decisions on your behalf if you are unable to do so yourself. This may include:
- Managing your bank accounts
- Paying bills
- Selling or purchasing property
- Handling investments
You can tailor a Power of Attorney to suit your needs by specifying the scope of authority granted to your attorney and the circumstances under which they can act. There are two main types of Power of Attorney in New South Wales:
- General Power of Attorney
A General Power of Attorney is usually used for a specific time or purpose, such as when you are travelling overseas or are hospitalised. It ceases to be effective if you lose mental capacity.
- Enduring Power of Attorney
An Enduring Power of Attorney continues to operate even if you lose mental capacity, allowing your attorney to keep managing your financial and legal affairs on your behalf.
It is usually prudent to put in place an Enduring Power of Attorney as part of your estate planning, together with the Enduring Guardianship document which relates to your health, living arrangements and personal care. Together these documents help ensure your affairs can be managed seamlessly by people you trust if circumstances where you need assistance or lose capacity to handle your affairs yourself.
What happens if I do not have a Power of Attorney in place?
If you lose capacity to manage your financial and legal affairs due to illness, injury, or age-related conditions and have no Power of Attorney appointed, it often presents a challenge to your loved ones.
Generally, one of your family members would need to apply to the NSW Civil and Administrative Tribunal (NCAT) to be appointed as your financial manager. This process can be time-consuming, costly and stressful at an already difficult time.
Circumstances may also arise where a family member who you would never have chosen takes it upon themselves to apply, creating an unfortunate situation over which you have no control.
In some cases, especially where there is conflict between family members, the Tribunal may appoint a financial manager who is neither a family member nor a close friend, such as the NSW Trustee & Guardian. This means important decisions about your finances may be made by someone who does not know your personal circumstances or preferences.
By creating a Power of Attorney in advance, you can avoid many of these complications. It helps ensure your financial and legal affairs are managed according to your wishes by someone you trust.
When does a Power of Attorney take effect?
The effect of a Power of Attorney can be crafted to suit your needs and circumstances. Generally, there are three main options:
- Commencement upon signing
You can choose for your attorney’s authority to begin as soon as you sign the document.
o This option is often selected for convenience, such as when you are travelling, unwell or otherwise unavailable to manage your affairs.
o However, it also means your attorney can exercise their role straight away, even if you still have capacity, so you should only use this option with someone you trust completely.
- Commencement upon medical practitioner certification
In this case, your attorney’s authority begins when a medical practitioner provides written confirmation that you are no longer able to make decisions independently.
o This option is ideal for people who want to retain full control over their affairs until they are medically determined to lack capacity.
- Commencement when the attorney considers you need assistance You can also choose for the Power of Attorney to commence when your attorney considers that you need assistance managing your affairs.
o This option provides flexibility and allows your attorney to step in when they believe you require support.
Choosing the right commencement option is an important part of creating a Power of Attorney. At Highlander Law, we can guide you through the options, ensuring that your document is tailored to your needs and is legally effective.
When should I create or update my Power of Attorney?
It is recommended that you create a Power of Attorney as part of your overall estate planning. However, you should consider putting one in place if:
- You have dependent children
- You are planning to travel or live overseas
- You are undergoing medical treatment that may affect your capacity to make decisions
- You are ageing and want to ensure your affairs are managed if you lose capacity
As with all estate planning documents, we advise you to review and update your Power of Attorney if:
- Your personal circumstances change, such as marriage, divorce, or the birth of children or grandchildren
- Your appointed attorney is no longer able or willing to act, or you wish to appoint a different person or change the way someone is appointed
- You acquire significant assets or make substantial changes to your financial arrangements
Keeping your Power of Attorney current helps ensure it remains relevant and enforceable when you need it most.
Common misperceptions about a Power of Attorney
“I don’t need a Power of Attorney unless I’m elderly.”
A Power of Attorney is not just for older individuals. It is a practical tool for anyone who wants to ensure their affairs are managed during periods of absence or incapacity – for example, during overseas travel, a lengthy hospital stay, or following an unexpected illness or accident.
“I’ll lose control of my finances if I appoint an attorney.”
You remain in control of how and when your attorney can act. You can: • Limit their powers to specific transactions or time periods
- Require that they act only if you lose capacity
- Decide when their authority begins, such as immediately, upon medical certification, or when they consider you need assistance
“I can’t revoke a Power of Attorney once it’s created.”
You can revoke a Power of Attorney at any time, provided you have the mental capacity to do so. It is important to formally notify your attorney in writing and ensure they stop acting on your behalf. Highlander Law can support you in completing this step with confidence.
“My attorney can make decisions about my health and lifestyle.”
A Power of Attorney covers financial and legal matters. A separate document, called an Enduring Guardian, allows someone to make decisions about your health and lifestyle if you lose capacity, including medical treatment and living arrangements. Both documents are important for a comprehensive estate plan to help ensure your wishes are respected.
How we can help you at Highlander Law
Get in touch with our team at Highlander Law for trusted advice and practical assistance in putting the right Power of Attorney in place and securing your legal and financial future.
Phone: 02 4861 6600
Email: [email protected]
This article provides general information only and does not constitute legal advice. You should obtain advice specific to your personal circumstances before making any decisions.