One way to secure your future is by preparing a Power of Attorney (POA). Before you prepare your POA, ensure you know and understand the right type for your circumstance – whether General or Enduring. A good understanding of General and Enduring POA can help protect your best interest and secure your future.
Powers of Attorney in NSW are governed by the Power of Attorney Act 2003 (NSW). It is a legal document that states you, the Principal or Donor, have appointed an Attorney. Your appointed attorney can act on your behalf and oversee your legal and financial affairs. An attorney’s duties may include:
Your “attorney” does not necessarily have to be a solicitor or lawyer. They may be a family member, close friend, solicitor, NSW Trustee & Guardian or a trustee organisation. Moreover, whether you are appointing a General or Enduring POA, your attorney must:
The POA authorises your attorney to make binding decisions about your legal and financial matters. Hence, before appointing your attorney, consider whether they really know what is important to you. Determine if you can trust them to act in your best interest, even without checking-up on them regularly. In addition, ensure they have sufficient skills and experience with managing money – especially other people’s money.
You can also decide how much power and/or limitations to place on your appointed attorney. If you do not set any conditions, then your attorney can make any legal or financial decision on your behalf. However, they must ensure they perform their duties as mandated by the Power of Attorney Act 2003 (NSW). Otherwise, they could face severe penalties and punishment.
From paying your bills to selling your real estate – your attorney can perform any task related to your finances. Hence, you should ensure your appointed attorney is qualified to accept and carry out their role. Most importantly, ensure you have a clear understanding of what General POA and Enduring POA are before appointing your attorney.
A General POA enables you to appoint someone to oversee your financial matters when you are incapable but still have capacity. For example, you got into an accident resulting in mobility difficulties and would need someone to make withdrawals from your bank accounts. Or you want someone who has more skills and experience to make dealings relating to your investments.
A General POA also enables you to appoint someone for a specific purpose and time. For example, you will be travelling for a long time and need someone to manage your bills while you are away. Another is if you have been appointed to a temporary work overseas and would need someone to manage your properties until you get back.
A General POA also enables you to authorise your attorney to act on your behalf over a specific single transaction. For example, you need someone to sell a property or shares when you are temporarily incapacitated. Or maybe you decided to relocate permanently, and you need someone to sell your assets at home. You can also have a separate General POA for each one-off transaction.
Witnessing requirements for a General POA are quite simple and straightforward. A General POA can be witnessed by:
A General POA can be customised to meet your requirements or your needed circumstance. It can take effect immediately upon signing or at the later time. Hence, making your POA early, does not mean your attorney can act on your behalf straight away.
A General POA can be a good strategy when you only need to have someone manage your finances once or temporarily. It can be cancelled once the appointed tasks have been completed, or when you have revoked it. However, it automatically terminates if you lose mental capacity or when you can no longer make your own decisions.
In NSW, loss of mental capacity means you have lost the ability to understand the nature of your actions. You are also deemed to have lost capacity when you are unable to carefully consider and decide issues on your own. Whether through dementia, an accident, stroke, or other circumstance, loss of capacity will cancel your General POA. When this happens, your attorney can no longer exercise any of the duties you have appointed them to do.
Like the General POA, an Enduring POA authorises your attorney to manage your financial matters when you cannot do it yourself. Unlike the General POA, an Enduring POA can still be enforced even after you have lost mental capacity. For example, you had an accident leading to a coma.
An Enduring POA enables your attorney to make decisions and manage your assets in the long term. Like the General POA, it authorises your attorney to deal with your finances and property when you are not able to. However, an Enduring POA can last for an indefinite period. It will be cancelled when you have passed away or have mental capacity to revoke it.
An Enduring POA helps you prepare for the future. When you lose mental capacity, you can no longer make a power of attorney. Hence, you must appoint your Enduring POA early to ensure you are ready for the unforeseen future.
Unlike the General POA, there are strict requirements for witnessing an Enduring POA. To be valid, your Enduring POA must be witnessed by any of the following:
Moreover, the witness must complete a certificate stating that they:
An Enduring POA can be an easy and practical way to help you ensure you are prepared for anything the future brings. You can nominate it to start immediately after your attorney signed the appointment. Or you can choose to make it operatable when the need arises. You may also revoke the Enduring POA at any time while you still have capacity.
The powers you give your attorney are limited to financial and legal matters. Hence, your attorney cannot make decisions about your lifestyle and medical care. Instead, you need to appoint an Enduring Guardian under the Guardianship Act 1987.
Appointing a Power of Attorney can be quite a complicated task depending on your needs and circumstance. Hence, you must make sure that your attorney is someone that you know and trust. Why? Because the POA enables them to manage your funds, shares, assets, tax, mortgages, and even property.
Understanding General and Enduring POA can indeed help you decide how to protect your interests in the future. However, getting the right legal advice is still the best and most beneficial solution.
A power of attorney is an immensely powerful legal document. Through a POA, your attorney can make crucial decisions about your financial and legal matters that are legally binding. You need the right legal advice to determine which type of POA is best for your circumstance.
VC Lawyers can help you secure your future and protect your best interests. We provide legal assistance on powers of attorney, guardianship, advanced health care directives, probates and administration, and family provision claims in Australia.
Our experienced solicitors offer practical advice on available legal options for whatever may happen to you in the future. We can help you with understanding and preparing your General or Enduring POA, so you are ready for whatever life gives you.
NB: This blog post is neither a legal advice nor intended to be such, and is only for general information. The same should not also be taken as a financial or commercial advice. The reader must personally consult their professional adviser/s on the contents of this blog post. VC Lawyers is not liable for any loss or damage, direct or consequential, as a result of the reader’s or a third person’s misconstruction of the wordings or use/misuse of the contents of this blog post.
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