Power of Attorney and Guardianship

The two types of lifetime authority documents — the Power of Attorney and the Enduring Guardianship — deal with two different kinds of matters.

A Power of Attorney mainly deals with financial and legal matters. For example, bank accounts, paying bills, property transactions, investment management, signing contracts, leasing documents, communicating with government agencies and other financial arrangements.
An Enduring Guardianship mainly deals with medical, lifestyle and personal care decisions. For example, where you live, what medical or dental treatment you receive, who provides your care services, and your day-to-day living arrangements.
For this reason, a person who wishes to arrange complete protection for lifetime decision-making usually needs to consider both types of document together. An attorney cannot make medical and lifestyle decisions on your behalf; an enduring guardian cannot deal with your bank accounts, property or financial documents.

A Power of Attorney is a legal document that allows you to appoint one or more trusted people to deal with financial and legal matters on your behalf, within the scope of the authority granted. The person appointed is usually called the attorney.

Depending on the terms of the document, the attorney may deal with a range of matters, such as paying bills, managing bank accounts, selling or buying property, signing contracts, managing investments, or communicating with government agencies and service providers.

A Power of Attorney can be subject to conditions and limitations as required. You can decide when the authority begins, whether it is limited to particular matters, whether several attorneys must make decisions jointly, and whether it should continue to operate after you lose capacity.

A General Power of Attorney is usually only valid while you still have decision-making capacity, and is commonly used for a specific purpose or a specific period. For example, you may be overseas for an extended time and need someone to handle the sale of property, leasing documents or bill payments in Australia on your behalf.

If you later lose capacity, a General Power of Attorney usually ceases to be effective.

An Enduring Power of Attorney, by contrast, can continue to operate after you lose capacity. It is more commonly used for long-term planning, ensuring that if you are unable to manage your financial and legal affairs yourself in the future, there is still someone you have appointed in advance who can deal with them on your behalf.

Depending on the terms of the document, an attorney may be able to assist with:

An attorney must act within the scope of the authority granted, and should act honestly, carefully and in your best interests. For arrangements involving property transactions, attention usually also needs to be given to whether registration is required and to the related documentary requirements.

If a person loses capacity but has not signed an Enduring Power of Attorney in advance, the family does not automatically acquire the authority to deal with that person’s financial affairs. Even a spouse, adult children or parents may not be able to directly operate bank accounts, sell property or sign legal documents.

In such cases, the family may need to apply to the relevant body to have a financial manager appointed. This process takes time, and the person ultimately appointed may not be the person whom the individual would most have trusted.

Putting an Enduring Power of Attorney in place in advance allows you, while you still have the capacity to make decisions, to personally choose who will assist with your financial and legal affairs in the future.

An Enduring Guardianship is a legal document that allows you to appoint one or more trusted people to make personal, medical or lifestyle decisions on your behalf when you are no longer able to make those decisions yourself.

The person appointed is usually called an enduring guardian.

This type of arrangement usually involves highly personal matters, such as where you will live in the future, whether to undergo particular medical or dental treatment, who provides your care services, and lifestyle-related decisions.

The decisions an enduring guardian can make depend on the powers granted in the appointment document. Common matters include:

Deciding matters relating to your health, lifestyle and day-to-day care.

You can set conditions and limitations in the document. For example, you can record in the document your preferences regarding medical care, living arrangements, how family members are to be consulted, or particular treatment choices.

An enduring guardian will usually only actually exercise these powers on your behalf when you have lost the capacity to make the relevant decisions. While you still have capacity, you remain able to make your own decisions.

An enduring guardian deals with personal and medical care matters; an attorney deals with financial and legal matters.

For example, if you need to sell property, pay bills or manage bank accounts, this usually needs to be handled by an attorney. If you need to decide whether to move into a care facility, undergo a particular treatment or arrange day-to-day care, this falls within the matters an enduring guardian may deal with.

This is why many complete estate plans include a will, an Enduring Power of Attorney and an Enduring Guardianship together. Each of the three addresses different stages and different types of issues.

Whether for an attorney or an enduring guardian, the choice of person is very important.

The person appointed should be trustworthy, at least 18 years of age, willing to take on the responsibility, and able to understand your wishes and family situation. For financial matters, it is also necessary to consider whether they have basic financial judgement, whether there may be any conflict of interest, and whether they are able to keep proper records.

If relationships between family members are complex, or disputes may arise in the future, the document can provide for joint attorneys, substitute attorneys, decision-making conditions or limits on authority.

The right person is not necessarily the closest relative, but the person best suited to act steadily, rationally and in accordance with your wishes in the relevant circumstances.

Different documents can have different arrangements for when they take effect.

A General Power of Attorney usually takes effect on signing or on a specified date, and ceases once the person loses capacity. An Enduring Power of Attorney can be set to take effect immediately, or once certain conditions are met, and can continue to operate after the person loses capacity.
An Enduring Guardianship usually comes into effect when the person loses the capacity to make the relevant personal or medical decisions. While the person still has capacity, they continue to make their own decisions about medical treatment, living arrangements and lifestyle matters.
As long as the person still has the relevant decision-making capacity, a Power of Attorney and an Enduring Guardianship can usually be revoked or changed. When there are changes in life stage, family relationships, health or relationships of trust, these documents should also be reviewed promptly to check whether they remain appropriate.

A Power of Attorney and an Enduring Guardianship may look like just a few forms, but they involve very important personal rights and arrangements for future decision-making.

The documents need to set out clearly the scope of authority, any conditions and limitations, how they take effect, the identity of the attorney or guardian, and whether there are joint decision-making or substitute arrangements. An Enduring Power of Attorney and an Enduring Guardianship also need to meet the requirements for signing, witnessing and explanation.

If the documents are not clear, this can lead to disputes in the future between banks, medical institutions, care facilities or family members. If the wrong attorney is chosen, or appropriate limits are not set, it can also give rise to financial abuse, conflicts over care or family disputes.

NS Legal can assist clients to draft, review and update Power of Attorney, Enduring Power of Attorney and Enduring Guardianship documents.

We can help clients to:

Review them together with the will and other estate planning documents.