What is a Power of Attorney?
What is a Power of Attorney?
A Power of Attorney is a legal document that allows you to appoint someone you trust to make decisions on your behalf.
The person making the appointment is known as the principal, while the person appointed to act is called the attorney. Despite the name, your attorney does not need to be a lawyer. They can be a trusted family member, friend or another suitable person.
A Power of Attorney can be an important part of planning for the future. It allows someone you trust to manage your financial and legal affairs if you are unavailable or unable to do so yourself.
Why would I need a Power of Attorney?
Life is unpredictable. You may become ill, travel overseas, or simply need someone else to assist with managing your affairs.
A Power of Attorney can allow your attorney to:
manage your bank accounts;
pay bills and expenses;
buy or sell property;
sign legal documents;
deal with government agencies;
manage investments and other financial matters.
The powers your attorney has will depend on the type of Power of Attorney you create and any limitations you include in the document.
What is the difference between a General Power of Attorney and an Enduring Power of Attorney?
One of the most common questions people ask is whether they need a General or Enduring Power of Attorney.
General Power of Attorney
A General Power of Attorney is typically used when you want someone to manage your financial or legal affairs for a particular purpose or period of time.
For example, you may appoint someone to manage your affairs while you are travelling overseas or recovering from surgery.
In most Australian jurisdictions, a General Power of Attorney will generally cease if you lose decision-making capacity.
Enduring Power of Attorney
An Enduring Power of Attorney continues to operate even if you later lose the capacity to make decisions yourself (subject to the laws of your state or territory).
This makes it an important estate planning document because it allows someone you trust to continue managing your financial and legal affairs if you become unable to do so.
Many people choose to prepare an Enduring Power of Attorney alongside their Will as part of a comprehensive estate planning strategy.
Who should I appoint?
Choosing your attorney is an important decision.
Ideally, you should appoint someone who:
you trust completely;
is responsible and organised;
understands your wishes;
is willing to act in your best interests;
is capable of making financial decisions.
You may also be able to appoint more than one attorney, depending on your circumstances and the laws that apply where you live.
Does a Power of Attorney allow someone to make medical decisions?
Not necessarily.
In many Australian states and territories, decisions about your health, medical treatment and personal care are dealt with under separate legal documents, such as an Enduring Guardian, Appointment of Medical Decision Maker, or similar instrument.
The terminology and legal requirements vary between jurisdictions.
If you wish to plan for future health or lifestyle decisions, you should seek advice about the documents that apply in your state or territory.
When should I make a Power of Attorney?
Many people assume Powers of Attorney are only for older Australians, but they can be useful for adults of any age.
You may wish to consider preparing one if you:
own property or other significant assets;
operate a business;
travel regularly;
want someone to assist with managing your affairs if something unexpected happens; or
are preparing your broader estate plan.
Having a Power of Attorney in place before it is needed can provide peace of mind for both you and your loved ones.
Planning ahead provides peace of mind
A Power of Attorney allows you to choose who will manage your affairs if you are unable to do so yourself, rather than leaving important decisions to chance.
At Gaia Law, we can advise you on the type of Power of Attorney that best suits your circumstances and prepare documents that comply with the laws in your state or territory.
Disclaimer: This article provides general information only and is not legal advice. The law relating to Powers of Attorney differs between Australian states and territories, including the types of documents available and the powers they provide. You should obtain legal advice tailored to your personal circumstances before preparing or relying on a Power of Attorney.
If you would like advice about Powers of Attorney or your estate planning needs, contact Gaia Law to arrange a consultation.
