Making a power of attorney
What is a Power of Attorney?
A Power of Attorney is a legal document you can sign that appoints someone (your attorney) to manage your financial affairs and property interests on your behalf because you are incapable of doing this yourself.
Why make a Power of Attorney?
Making a Power of Attorney has many practical advantages. It can give you the peace of mind that your financial affairs will be placed in the hands of someone you trust if you become incapable of managing your affairs through an accident or illness.
It is an important part of your estate planning and helps ensure your financial future is looked after.
What can an attorney do?
An attorney can usually sign documents on your behalf, access bank accounts to withdraw and deposit funds, pay bills from your account, deal with other assets such as shares, property and other investments.
An attorney can only act in your best interests and can only use your assets for your benefit. The attorney cannot use your assets to benefit themselves or someone else.
Who can be your attorney?
You can appoint one person, or more than one person to be your attorney. The person or persons you appoint must be:
Over the age of 18 and mentally capable of understanding the nature and effect of a Power of Attorney
Should be someone you trust to manage your affairs.
Someone who is willing to act as your attorney. The person you appoint must consent to their appointment as your attorney by signing the Power of Attorney.
What kind of Power of Attorney can you make?
You can make either a General Power of Attorney or an Enduring Power of Attorney.
A General Power of Attorney operates when you still have capacity and can be used when you are going overseas so someone can pay your bills for you until you get back home or have business dealings on the other side of the country or overseas so someone can act on your behalf without you being physically present. However a general power of attorney ceases to have effect once you lose mental capacity.
An Enduring Power of Attorney on the other hand does the same type of things as a general power of attorney but has the added advantage of staying in effect once you lose mental capacity. It ensures you have someone to assist in the management of your financial affairs once you have lost capacity because of a:
Crippling accident
Stroke
Dementia/Alzheimer’s diagnoses.
We advise our clients to make an Enduring Power of Attorney instead of a General Power of Attorney as it is impossible to anticipate when an accident is going to happen. We believe that everybody, no matter their age, should appoint an attorney who can legally act on their behalf if the need arises.
What happens if I do not have an Enduring Power of Attorney?
If you have lost capacity and you do not have a Power of Attorney, someone in your family will need to apply to the NSW Civil and Administrative Tribunal (NCAT) to be granted power over your legal and financial affairs. NCAT has a process to determine the most appropriate person to manage your affairs. This could be an expensive and time-consuming process for your family.
Alternatively if you have no suitable family member to apply to NCAT to be appointed as your financial manager then your assets may need to be managed the office of The NSW Trustee & Guardian. The cost of government administration is significant.