Powers of Attorney
When making a Will and planning your estate, you might like to consider the benefits of making a power of attorney. A power attorney is a legal document made by a person (known as the principal) that authorises one or more others (known as attorneys), to do certain things on behalf of the principal.
There are different types of powers of attorney, and we can explain the differences to you, their benefits, and help you decide what is right for your circumstances.
When should I make a power of attorney?
Anybody over the age of 18 years with legal capacity can make a power of attorney. A power of attorney is useful if:
- you anticipate the need to sign documents or complete certain transactions when you will be unavailable to do so, for example, if you are planning an overseas trip
- you reach a stage in your life when you need more help managing your affairs
- you want to ensure that somebody you trust is appointed to look after certain matters if you become physically or mentally incapacitated
You cannot make a power of attorney if you lack mental capacity so it is important to prepare and sign a power of attorney while you have capacity and the mindset to consider who to appoint and the role you would like your attorneys to fulfil.
You should only choose somebody you trust to act as your attorney, as they will be making important decisions on your behalf which must be made in your interests.
Types of powers of attorney
Powers of attorney can be prepared to suit the needs of the principal and may offer safeguards by placing restrictions on the types of matters an attorney can deal with and when the authority to do these things operates. For example, a power of attorney may be prepared now, but specify it is only effective if or when a certain event happens.
A general (non-enduring) power of attorney authorises an attorney to deal with certain financial matters but ceases to operate if the principal is incapacitated. The power can be limited so that the attorney is only authorised to carry out very specific functions, or the attorney may be authorised to act on a range of matters.
An enduring power of attorney enables your attorney to deal with personal matters, financial matters, or both, if you become incapacitated. If the principal becomes incapacitated after the appointment has been made, the enduring power of attorney cannot be revoked.
What are the duties of an attorney?
Your attorney must always act in good faith and in your best interests. When acting for an incapacitated principal, the attorney should wherever possible, encourage the principal to take part in the decision-making process and make decisions that will give effect to the principal’s wishes.
An attorney is generally prohibited from receiving remuneration, a gift or benefit unless expressly stated in the document.
The attorney should maintain separate records and accounts on the principal’s behalf.
The matters that may be dealt with under a power of attorney are specified in the document itself. They can range from dealing with a one-off transaction, to managing a number of matters for you if you become incapacitated. It is important to understand and be comfortable with your choices and we can help you make a decision and prepare a power of attorney that is right for your circumstances.
If you need assistance, contact [email protected] or call 03 9546 8155 for expert legal advice.