A Power of Attorney is an important legal document that allows you to appoint a trusted person to manage certain legal and financial matters on your behalf.
The person making the Power of Attorney is known as the principal, while the person appointed to act on their behalf is known as the attorney.
A Power of Attorney can be useful in many situations, including if you are travelling, become unable to manage your affairs yourself, or want to ensure someone you trust can assist with important financial decisions in the future.
If you do not currently have a Power of Attorney in place, our experienced wills and estates lawyers can provide advice about preparing one that suits your circumstances.
When Is a Power of Attorney Useful?
A Power of Attorney can provide flexibility and peace of mind by allowing someone you trust to assist with your affairs when needed.
Common situations where a Power of Attorney may be useful include:
- You are travelling and need someone to manage transactions or sign documents on your behalf;
- You want assistance managing financial paperwork, bills or banking matters;
- You want to plan ahead in case illness, injury or age affects your ability to manage your own affairs; or
- You want to reduce the burden placed on family members if you become unable to make decisions yourself.
Does an Attorney Need to Be a Lawyer?
No. An attorney does not need to have legal qualifications.
You can appoint almost any adult you trust, however choosing the right person is an important decision because they may be given significant authority over your financial and legal affairs.
An ideal attorney should:
- Be trustworthy and act with integrity;
- Be willing and able to take on the responsibility;
- Understand your wishes and priorities;
- Be organised and capable of managing financial matters;
- Have enough time to properly perform the role;
- Respect your privacy and confidentiality; and
- Avoid conflicts of interest.
What Are the Different Types of Power of Attorney?
The type of Power of Attorney you need will depend on your circumstances and the level of authority you want to give another person.
General Power of Attorney
A General Power of Attorney allows an attorney to manage certain legal and financial matters on your behalf while you still have legal capacity.
This type of Power of Attorney may be useful if you are travelling or temporarily unable to manage your affairs but want the authority to end if you lose capacity.
Enduring Power of Attorney
An Enduring Power of Attorney continues to operate if you lose the ability to make your own financial and legal decisions due to illness, injury or incapacity.
In NSW, an Enduring Power of Attorney can authorise an attorney to make financial and property decisions on your behalf. It does not allow an attorney to make personal or medical decisions. These matters are dealt with through an Enduring Guardian appointment.
Should I Appoint More Than One Attorney?
You can appoint more than one attorney if you believe this is appropriate.
Having more than one attorney can provide flexibility and additional protection, particularly where you want more than one person involved in managing your affairs.
Multiple attorneys can usually be appointed:
- Jointly – meaning all attorneys must agree before making decisions; or
- Jointly and severally – meaning either attorney can act independently.
The right option will depend on your personal circumstances, family relationships and the level of responsibility involved.
Should I Pay My Attorney?
Generally, an attorney does not need to be paid to perform their role.
Payment is more commonly considered where the attorney is a professional who is providing services, rather than a family member or trusted friend assisting with your affairs.
How Do I Know if Someone Has Capacity to Make a Power of Attorney?
A person must have the required mental capacity when making a Power of Attorney.
This means they must understand:
- The nature and effect of appointing an attorney;
- The authority they are giving to another person; and
- The consequences of the decisions being made on their behalf.
If there are concerns about a person’s capacity, particularly due to illness, dementia or cognitive decline, obtaining medical evidence may be appropriate.
Where medical evidence is required, it is often recommended that the Power of Attorney is prepared and signed around the same time as the medical assessment to help reduce the risk of future disputes.
Why Is It Important to Prepare a Power of Attorney Early?
Many people assume a Power of Attorney is only necessary later in life. However, unexpected events such as accidents, illness or incapacity can happen at any age.
Preparing a Power of Attorney while you have capacity allows you to:
- Choose who you trust to manage your affairs;
- Decide what authority they will have;
- Put protections in place before they are needed; and
- Reduce stress for your family in the future.
How Can a Lawyer Help With a Power of Attorney?
An experienced lawyer can help you understand your options and prepare a Power of Attorney that reflects your circumstances.
Legal advice can help you:
- Choose the right type of Power of Attorney;
- Understand the powers being given;
- Select an appropriate attorney;
- Ensure your documents work together with your estate plan; and
- Reduce the risk of future disputes.
Get Advice About Preparing a Power of Attorney
A Power of Attorney is an important part of planning for the future. Having the right document in place can help ensure someone you trust can manage your affairs if you are unable to do so yourself.
To discuss preparing a Power of Attorney, contact Somerville Laundry Lomax for advice tailored to your circumstances.
This article provides general information only and is not intended to be legal advice. You should obtain professional advice relevant to your circumstances.