Since the pandemic, many people’s lives have changed significantly. With borders closed, they have been unable to enter Australia to handle local affairs such as Australian banking or buying and selling property. In such circumstances, arranging a Power of Attorney in advance may be a wise choice. A Power of Attorney grants a person you trust the authority to make decisions on your behalf.
General Power of Attorney / Enduring Power of Attorney
Similarities
Both a General Power of Attorney and an Enduring Power of Attorney are legal documents that authorise an appointed person to make decisions on the principal’s behalf in relation to their property or financial affairs.
What the attorney can do on your behalf includes, but is not limited to, managing bank accounts, paying bills, making investment decisions, and even selling or purchasing shares or property.
Differences
However, please note that a General Power of Attorney is revoked once the principal loses the capacity to make decisions for themselves, whereas an Enduring Power of Attorney remains in effect even after the principal loses that capacity. Loss of capacity can include, but is not limited to, accidental injury or sudden illness.
If no Enduring Power of Attorney is in place at the time capacity is lost, even close family members or friends may not have the legal authority to make decisions regarding property or financial affairs. In that case, the Guardianship Tribunal or the Supreme Court would need to appoint a financial manager.
That is why a Power of Attorney is a matter of being prepared for the unexpected — particularly the Enduring Power of Attorney, which is the main focus of this article.
Requirements for the Principal of an Enduring Power of Attorney
– Must be at least 18 years old
– Must have the legal capacity to understand the function and nature of a General or Enduring Power of Attorney
A further note on the second point: individuals with cognitive impairment may still sign a General or Enduring Power of Attorney, but this depends on the extent to which they understand the document. A medical professional may be required to conduct a capacity assessment.
Requirements for the Attorney under an Enduring Power of Attorney
The attorney can be a family member or friend aged 18 or over, or a paid public trustee or trustee company. One or more attorneys may be appointed. Apart from medical decisions, there is no legal limit on the scope of authority granted under an Enduring Power of Attorney. The principal may specify various restrictions, such as time limits and so on.
When handling the principal’s financial affairs, the attorney must not seek to benefit themselves or others (unless specifically authorised). While the principal still has decision-making capacity, the attorney must follow the principal’s instructions, and if the principal discovers that the power is being misused, they may take legal action.
If more than one attorney is appointed, they may make decisions independently, or make decisions jointly, all depending on what authority the principal specifies. However, please note that if decisions must be made jointly and one of the attorneys can no longer exercise the power, the Power of Attorney will become invalid. If the attorneys can act independently and one of them can no longer exercise the power, this will not affect the other attorneys, and the Enduring Power of Attorney will remain in effect.
Commencement and Termination
The principal can specify when the Enduring Power of Attorney comes into effect, and that commencement time can be amended or revoked at any time while the principal still has legal capacity. The Power of Attorney will automatically terminate upon the principal’s death or bankruptcy.
Enduring Power of Attorney vs Enduring Guardianship
If you lose the capacity to make your own decisions due to a car accident or illness, the issue of Enduring Guardianship may also arise. Enduring Guardianship is an authority to make decisions about lifestyle, health and personal matters on behalf of the person being looked after, and only comes into effect after that person loses the capacity to make decisions for themselves.
When making decisions, the Enduring Guardian can take into account the past and present wishes of the person in their care, as well as consult professionals or close family and friends, before making decisions on their behalf — for example, decisions regarding daily living, medical care and treatment.
Final Thoughts
When considering who to appoint as your attorney, don’t only think about personal relationships. More importantly, consider whether they have the necessary capability — particularly if the principal’s financial affairs are relatively complex, in which case it is advisable to choose a person or organisation with strong legal capability and sufficient time and ability to manage complex property and other affairs on the principal’s behalf.
In addition, if the attorney needs to handle real property matters, under NSW regulations a General or Enduring Power of Attorney must be registered with the NSW Land Registry Services.
To grant the attorney the authority you intend to grant, while at the same time ensuring that authority is not abused, it is recommended that you prepare an Enduring Power of Attorney with legal advice to set appropriate limits.
