Are you still capable of managing your daily activities and finances? If so, take the opportunity to consider a scenario in which you are unable. Who would you want making decisions for you, how much power would you wish they had and why is this authoritative figure necessary?
Be prepared. Get in touch with an estate planning lawyer. An estate planning lawyer will help you understand what is involved in an estate plan, including the appropriate documentation for your situation.
What does Power of Attorney mean?
The power of attorney (POA) is a legal document which allows an individual (the principal) to grant a separate individual/s (attorney) authority over their decisions in the occasion that they are incapable or busy.
In the search for a suitable template, you may come across either an enduring or general POA.
General POA: This document will cease to operate after the principal loses the mental capacity to make a financial decision.
Enduring POA: This document will however continue to exist even after the principal loses capacity. This mental capacity may deteriorate due to dementia, stroke or various other brain injuries.
Find out more about the difference between general power of attorney and enduring power of attorney in our previous guide.
Determination of the Principal’s capacity
In order to confirm the principal’s capacity, they are required to consult their local GP for an assessment, if capacity is competent then a written document will be granted for legal validity.
A person is eligible to be an attorney if they are;
- 18 years of age or older;
- Not insolvent under administration; and
- Not a care worker, a health provider or an accommodation provider for the principal.
Who should I choose?
In deciding who your attorney should be, it is essential to consider these queries;
- Is the individual 18 years or older?
- Is the person trustworthy?
- Will they be competent in dealing with all my financial and property matters?
- Should I put conditions or restrictions of this person?
- Will this individual act in my best interests?
“What if I don’t know?”
If you’re unsure of who to delegate this role to, you are able to appoint the ‘NSW Trustee and Guardian’ as your attorney. This body offers active assistance, which is designed to provide the principal a safeguard from unforeseen events (such as massive increases in operational costs). This request will not entail a fee for the drafting of the POA, however the Principal will incur costs if they are to lose capacity and requires the ‘NSW Trustee and Guardian’ to act as your attorney.
How much power?
The principal is able to be particular in what authority they grant their attorney, having the option to either grant one specific issue or delegate the majority of their matters to their attorney – particularly financial and personal.
- e.g consent to paying certain bills, manage assets, assistance with taxes, make deposits and withdrawals
Personal care and welfare decisions
- e.g consent to giving, withholding or stopping medical treatments or services
What can I do if my Attorney is not acting in my best interest?
You have the ability to revoke the power of attorney at any time provided you have the mental capacity to do so.
“What if I’ve lost my mental capacity?”
If you have lost capacity and your attorney is not acting in your best interests, you are advised to confer with the ‘Guardianship tribunal’ or the ‘Supreme Court’ to inquire into the issue.
What could happen if I don’t have a power of attorney?
If an individual were to become mentally incapable and thus be unable to manage their day to day finances, their bank would reject any instruction that is brought to them from an individual who is not legally recognised as their attorney.
Extending on from this, is the situation in which a guardian will be required to apply through the court, rather than by POA, in order to lawfully act on your behalf. This process via the court is costly and often requires continual costs throughout the life of the principal with mental incapacity.
A POA can only be granted whilst an individual is mentally capable in understanding the nature of the document. Should an individual fall ill or experience an accident which results in incapacity, they will subsequently be unable to opt for a POA. As such, it is acknowledged that due to the fact some illnesses are unanticipated, individuals are recommended to proceed with the registration of a POA as soon as possible. This urgency will alleviate the unfavourable outcome of that may result due to incapacity, as it ensures your interests will continue to be protected by your attorney.
Steps to constructing a POA
- Decide whether the Attorney will be dealing with financial or medical matters – in a general or enduring nature.
- Choose your desired Attorney
- Download or write up at POA document
- Name the parties within the document
- Name the powers granted
- Gather witnesses, as it is necessary in some states to have the signing of the document witnessed.
- Have the document authorised by a notary, in order to reduce the chance that the documents validity will be contested.
The choice is in your hands
Delay a POA and risk incapacity without protection over your interests or ensure the longevity of your interests today.
LawPath can connect you with a highly qualified estate planning lawyer Contact a LawPath consultant on 1800LAWPATH to learn more about power of attorney, customising legal documents, obtaining a fixed-fee quote from one our network of 600+ expert lawyers or to get answers to your legal questions.