Power Of Attorney – myth and reality
There are a lot of mysteries, myths and misinformation around the Power of Attorney, but there needn’t be if you understand and know the truths behind it.
A power of attorney is a document you can sign to appoint another person as your attorney to act for you in legal, financial and property matters.
It doesn’t have to be a lawyer. It can be a friend, family member or someone else, but must always be someone you trust implicitly. You can have two or more people who can’t act without the other’s approval.
The times when you may need a power of attorney include the following.
- You are going overseas or are out of touch for a while and would like someone to have the power to deal with your financial, legal or property affairs while you are away.
- You may be facing a time when your decision-making capacity becomes impaired such as a medical or health problem.
- You may be physically unable to execute documents or duties and would like another person to be able to deal with your affairs.
- You may be going into hospital or care for an indefinite period of time.
You don’t have to sign over all power to your attorney, and in some cases it may be best not to do so. They are accountable to no one. If wrongdoing is suspected it will have to be proved in court.
The powers you give can be as wide or as narrow as you wish. You can set limits on financial transactions and confine it to just paying bills.
In NSW the power of attorney does not give power to make personal decisions or decisions relating to health care or lifestyle on your behalf should you lose the capacity to do so. If you want to do this you will – while you still have the capacity to make such decisions – need to appoint what’s called an enduring guardianship.
There are two types of powers of attorney.
- A General Power of Attorney is only valid while you are still personally able to carry out any of the powers you have given your attorney such as banking and selling property.
- An Enduring Power of Attorney is for when you will need someone to make decisions for you as you lose the capacity to do so for yourself. These appointments have to be witnessed by a solicitor, barrister or court registrar, and must be made while you are still of sound mind.
There are all sorts of legal requirements, pitfalls and caveats on these powers, and it would be best to consult a legal expert before committing yourself.
For more information, please see Power of Attorney and Enduring Guardianship – the horror story edition.