A Power of Attorney is a legal document that gives a person or trustee organisation (the Attorney) the legal authority to act for a person (the Principal) to manage their assets and make financial and legal decisions on their behalf.
Having a Power of Attorney in place ensures that there is someone that can manage your financial and legal decisions in the event that you suffer from a temporary or permanent loss of capacity (i.e. you are no longer competent to make your own decisions).
If you do not have a Power of Attorney in place when you lose capacity, a Court or Tribunal can appoint some to manage your finances. Although, this is unlikely to be a family member or close friend.
This article seeks to answer some of the most common questions that arise in relation to a Power of Attorney
Can you have more than one Attorney?
You can appoint more than one Attorney, in which case, both of you Attorney can act either jointly or severally to make decisions relating to your financial and legal affairs.
Alternatively, you can appoint an Alternate Attorney and/or Substitute Attorney. An Alternate and/or Substitute Attorney will manage you financial and legal affairs in the event that your Attorney is unwilling to act, dies, loses capacity or vacates office for any reason.
What rights and responsibilities does a Power of Attorney have?
Your Attorney generally has the power to do the following on your behalf:
- signing legally binding documents;
- operating bank accounts;
- paying bills;
- buying and selling real estate;
- managing investments; and
- collecting rent
Under section 11(2) of the Power of Attorney Act 2003 (NSW) (the Act), your Attorney may also be able to make gifts of your money or property, if you have specifically authorised your Attorney to do so in the Power of Attorney document.
Similarly, under section 12(2) of the Act, your Attorney may be able to use your money for their reasonable living and medical expenses, if you have specifically authorised your Attorney to do so in the Power of Attorney document.
Nevertheless, you can impose limits or conditions on what your Attorney can and cannot do on your behalf in your Power of Attorney document.
Your Attorney has a duty to act in your best interest and ensure that they adhere to the terms of the Power of Attorney document. In particular, you Attorney must:
- keep their money and assets separate from your money and assets (unless you and your Attorney are joint owners of property or hold joint bank accounts);
- keep a proper account and records of how they handle your money and assets;
- not gain a benefit from being an Attorney, unless expressly authorised; and
- act honestly in all matters concerning your legal and financial affairs
Who should you appoint as your Attorney?
Given the wide range of powers that a Power of Attorney possess, it is important that you appoint someone to the position who you trust.
You should also ensure that the person you appoint has the time and ability to carry out their role.
In particular, you may want to consider whether your prospective Attorney:
- has financial skills and the ability to deal with taxes and financial planning;
- respects your view, wishes and existing relations, values and culture;
- respects your right to confidentiality;
- acts according to any limits or conditions placed on their authority;
- keeps accurate records of all dealings and transactions;
- keeps their finances and money separate from yours;
Your attorney may be any of the following, provided they are over the age of 18 years:
- family member;
- close friend;
- solicitor; and
- NSW Trustee & Guardian or a trustee organisation.
What is the difference between a General Power of Attorney and Enduring Power of Attorney?
A General Power of Attorney allows an Attorney(s) to manage the financial and legal decisions of the Principal, while the Principal still has the capacity to make their own decisions.
An Enduring Power of Attorney allows an Attorney(s) to manage the financial and legal decisions of the Principal even after the Principals no longer has the capacity to make their own decisions.
Furthermore, an Enduring Power of Attorney only comes into operation once the Attorney has accepted their appointment.
When should a Power of Attorney be registered?
If you wish for your Attorney to sell, mortgage, lease or otherwise deal with your real property, you must register your Power of Attorney with NSW Land Registry Services.
Otherwise, there is no requirement to register a Power of Attorney.
Can a Power of Attorney be revoked?
You can revoke a Power of Attorney, at any time, provided that you still have the capacity to do so.
There is no prescribed form for revoking a Power of Attorney. Nevertheless, you must notify your Attorney, preferably in writing, that the Power of Attorney has been revoked.
There is no obligation to register a revocation of the Power of Attorney. However, if the Power of Attorney document has been registered, it is advisable for the revocation to be registered as well.
You should also inform your bank that the Power of Attorney has been revoked, as well as any other person or institution who is aware of the Power of Attorney.
What are the witnessing requirements of a Power of Attorney?
A General Power of Attorney can be witnessed by anyone over the age of 18 years who is not an attorney appointed under the document.
On the other hand, an Enduring Power of Attorney can only be witnessed by the following:
- A Solicitor or barrister
- A Registrar of a NSW Local Court
- A licensed Conveyancer who has completed an approved course under the Powers of Attorney Act,
- A Legal practitioner qualified in a country other than Australia; or
- An employee of NSW Trustee & Guardian or a Private Trustee company who has completed an approved course under the Powers of Attorney Act.
At the end of the Enduring Power of Attorney form there is certificate that must be completed by the witness. The certificate states that the witness:
- explained the effect of the Power of Attorney directly to you before it was signed
- was satisfied that you appeared to understand the effect of the Power of Attorney
- is not an attorney appointed under the Power of Attorney
If the Witness has doubts about your ability to understand what you are signing, they are required to take reasonable steps to confirm your mental capacity.
Can an Attorney make health or lifestyle decisions on your behalf?
An Attorney cannot make health or lifestyle decisions on your behalf. If you wish to appoint someone to make such decisions on your behalf, you should appoint an Enduring Guardian under the Guardianship Act 1987 (NSW).
A Power of Attorney is an important legal document that has significant implications for your legal and financial affairs. As such, it is best to put a Power of Attorney in place, whilst you are still well and able and there are no doubts about your capacity.