A Power of Attorney is a legal document that gives a trusted person, the legal authority to act for you, and to make legally binding decisions on your behalf in relation to your legal and financial affairs. If you do not have a Power of Attorney, then you should contact us and find out more.
Below are 6 top questions dealing with Powers of Attorney.
Circumstances when a Power of Attorney is particularly useful:
• to relieve yourself of the day to day demands of financial paperwork and record keeping;
• as a safety net when travelling or to allow someone to handle your affairs in your absence; or
• if you are unable to manage your prosperity or financial affairs.
Does the Attorney need to be a lawyer?
The person appointed does not need to have legal qualifications – you can appoint anyone over the age of 18 years although the person appointed should be done with careful thought as you are providing them with considerable power.
An ideal attorney should:
• have integrity;
• be willing to act in that capacity;
• have competence in areas of relevance;
• be able to act in a business-like manner;
• be able to spare the time necessary for the task;
• be agreeable to respecting the confidentiality of the donor’s affairs; and
• be impartial and have no known conflict of interest.
Are there different types of Powers of Attorney?
Yes, a General Power of Attorney which is:
• only valid while you have legal capacity;
• useful if you are going away for an extended period and you do not want the authority to continue should you lose legal capacity; and
• usually drawn up for a specific purpose with specific or general powers.
And an Enduring Power of Attorney (EPA) which:
• continues to be valid even if you lose legal capacity due to disability or illness;
• may be activated when required or upon loss of legal capacity; and
• allows your attorney to commence or to continue to manage your affairs even though you have become unable to give lawful instructions.
Is it better to have more than one attorney?
We recommend that you do have more than one attorney, or a substitute attorney if the appointed attorney cannot act or continue to act, as it gives you more flexibility.
Some examples to illustrate why it is helpful include siblings who should act together, or you are unsure if one should act on their own, or to allow the power to continue if one attorney dies or cannot act. This also applies if you appoint a spouse and a child as an alternative in the event the spouse dies. You can also appoint attorneys to act “jointly”, “severally” or “jointly and severally”.
Should I pay my attorney?
This is not necessary to give legal effect to the power, and for a financial power would normally only be considered if the attorney(s) is a professional.
How do I know if the person has sufficient mental capacity to make a power of attorney?
There is no simple formula, but in general terms they must be able to:
• understand the major consequences of a decision;
• take responsibility for making that choice; and
• make a choice based on the risks and benefits that are important to them.
If there is any doubt about capacity, it’s best to get in touch with a doctor and ask for a written opinion. Remember, different powers require different levels of understanding. If this is done it is wise to have the Power of Attorney signed on the same day as you get the medical report so there can be no subsequent claim that the appointment was invalid.
In our view many clients do not recognise the possible benefits (and pitfalls) of Powers of Attorney.
The need for a Power of Attorney can be numerous. In case of accident, sudden illness, planned or unexpected absence, or when you just can’t cope, you may need someone to manage your financial affairs. So it doesn’t matter if you are old or young, in business or not, if you do a lot of travelling or not, there are great benefits in having a power of attorney.
If you do become legally incapacitated without having appointed a Power of Attorney it may require an application to the NSW Civil and Administrative Tribunal (“NCAT”) for what is called a Financial Management Order. Such orders will appoint either the NSW Trustee & Guardian to manage your financial affairs or appoint a private individual under the direction of the NSW Trustee & Guardian. In each case the NSW Trustee & Guardian will charge a fee to your personal estate and it removes your choice as to who looks after your legal and financial affairs. The costs could overwhelmingly exceed the costs of putting in place a Power of Attorney whilst you still have legal capacity.
To find out more about Powers of Attorney and their benefits call us on (02) 6662 1522 or email firstname.lastname@example.org.