An enduring power of attorney is a legal document you can sign to authorise someone else to act on your behalf.
While people understand the importance of making a Will, they often overlook making a power of attorney.
A Will determines who will take control and receive your assets when you pass away. But what happens if you are still alive but don't have the capacity to take care of your own affairs and keep the bills paid? This is where a power of attorney comes in.
A power of attorney documents allows you to appoint your partner or your children, for example, to look after your finances and pay the bills when you are too old to manage these tasks on your own.
By granting someone a power of attorney, you give them legal authority to act for you. This includes the power to manage your legal and financial affairs, including buying and selling real estate, shares and other assets, operating your bank accounts and spending money on your behalf.
In NSW, you can specify that your power of attorney either starts immediately or once a medical practitioner certifies that you can no longer manage your own affairs.
You can grant either a "general" power of attorney or an "enduring" power of attorney. The difference is that an enduring power of attorney continues not only while you have mental capacity, but will "endure" (continue) even if you lose your mental capacity.
It is important to make an enduring, rather than general, power of attorney. With an enduring power of attorney, if you have an accident that puts you in a coma, you suffer from dementia or you lose mental capacit for any other reason, someone can still take care of your affairs.
Of course, you wont have the opportunity to nominate who controls your legal and financial affairs after you lose capacity, so you should do it now while you still can.
You attorney must exercise their powers for your benefit. Nonetheless, this gives your attorney a broad discretion to manage your affairs as they see best. It is, therefore, important to chose an attorney who is reliable and trustworthy.
The NSW Enduring Power of Attorney form gives you the option to appoint one or more attorneys. You can also decide whether they all need to agree on each decision (that is, act jointly) or whether they can act independently (jointly and severally).
In NSW, the appointment of an attorney is only effective if the attorney accepts their appointment. The attorney must sign the power of attorney document, which requires them to accept that:
- they must always act in the best interests of you, the principal.
- they must keep their own money and property separate from yours.
- they must keep accounts and records, and
- act honestly.
