A Power of Attorney is a legal document whereby you appoint an Attorney to manage your financial and certain legal affairs, such as signing legally binding documents on your behalf. An Attorney cannot make decisions about your lifestyle, medical treatment or welfare. The Power of Attorney ceases when you die and ceases to have an effect if a person loses mental capacity unless an Enduring Power of Attorney has been granted.
The difference between an Ordinary Power of Attorney and an Enduring Power of Attorney
An Enduring Power of Attorney continues to be enforced after you lose capacity to manage your own affairs. A person can make either type of Power of Attorney, however, you should consider an Enduring Power of Attorney in case of future incapacity or as you age. It is too late to appoint someone you choose once you lose mental capacity. If you are no longer able to manage your financial affairs and you do not have an Enduring Power of Attorney in place, then an application to the Guardianship Tribunal or to the Supreme Court may be required to appoint a financial manager of your affairs.
To be an effective Enduring Power of Attorney, it is necessary for the instrument under which the Attorney is appointed, to be explained before it is signed before a prescribed witness (a solicitor, barrister or Registrar of a Local Court) with such witness completing a certificate under section 19 of the Powers of Attorney Act 2003.
If it is intended that the Attorney will sign documents that affect real estate, the Power of Attorney must be registered at the Land & Property Information NSW.
Enduring Powers of Attorney are essential for all persons, however, the choice of attorney and the powers of that attorney need to be carefully thought through, particularly where blended families are involved. Careful consideration needs to be undertaken when drafting an Enduring Power of Attorney, the balances and needs of the donor, the attorney and other family members of a blended family to cover:
- What powers should the attorney have and should those powers be exercisable separately or jointly;
- Resolving the tension between the need to sell the family home for the aged care bond;
- Protecting the interests of the second spouse by inserting protective conditions;
- Protecting the position of the children of the first marriage.
When can an Attorney manage financial affairs?
The Attorney can be activated either by choice (for example, if you are travelling overseas for an extended period) or if you lose the ability to make these decisions yourself due to illness.
Who can I appoint as my Attorney?
It is important to choose someone you trust who understands your wishes. An Attorney should have the skills and ability to manage your finances and act in your best interests. You can appoint a solicitor, a Trustee, organisation or someone in your life you trust.
Once I have a Power of Attorney, will I lose control of my finances?
No. The appointment of an Attorney gives formal authority for the chosen individual to manage your financial and legal affairs, according to your instructions.
How can I cancel a Power of Attorney?
You may cancel (revoke) your Power of Attorney at any time if you have the capacity to do so. There is no formal process. You should write a letter to your attorney and inform them that their appointment is ending. A copy of the letter should be kept and you should notify your bank and other financial institutions of the changes. If you have registered your Power of Attorney for real estate purposes, you should also register any changes to your Power of Attorney.
Appointment of Enduring Guardian
An Enduring Guardian is a person you choose to make decisions on your behalf in areas of lifestyle and health, such as congregation and services. An Enduring Guardian only comes into effect if you can no longer make decisions for yourself due to being incapacitated. Appointing an Enduring Guardian can avoid conflict and distress for you and your family and ensures that you are in control of who makes decisions on your behalf. An Enduring Guardian cannot make or alter a Will for you, they cannot make decisions about your money or assets and they cannot consent to medical or dental treatment if you are refusing it. More than one person may be appointed as your Enduring Guardian. Your Enduring Guardian should be someone you trust to be able to take into account your views on previous lifestyle choices and make decisions in your best interests.
Can the nominated guardian be changed or cancelled?
You may cancel (revoke) your Enduring Guardian while you still have the capacity by completing a revocation form and giving it to your guardian. If you do not have the capacity, only the NSW Guardianship Tribunal or the Supreme Court can revoke the guardianship. There is an automatic revocation if you marry and you will need to complete a new form of appointment.
Legal Capacity
NSW Law assumes that everyone has the mental capacity to make decisions, that is, they can understand the way information is presented to them, make an appropriate decision, and clearly communicate their choices. Capacity may however be affected temporarily because of illness or the effects of medication, or permanently affected due to conditions such as intellectual disability, dementia, mental illness or brain injury. It is important not to assume that just because someone has memory problems or a disability, they cannot make their own decisions. If you have concerns about a person’s capacity, you should request an assessment by a health professional. To plan ahead, you must be deemed to have capacity.
For more information and advice concerning Powers of Attorney and Appointing an Enduring Legal Guardian, contact the experienced team at Rockliffs Lawyers today.