Who can make decisions for you when you can’t?  A spouse, friend or relative would be unable to act on your behalf or assist you with any of your personal, legal or financial affairs unless you had previously signed an Enduring Power of Attorney.  A General Power of Attorney ceases to operate where you lose mental capacity due to accident or illness.

Your Will is one of the most important documents you will ever prepare.  However an Enduring Power of Attorney may play a significant part in your life for many years, and needs just as much consideration as your Will.

As we are living longer, it is increasingly important to plan for your future – and this may mean putting in place some legal safeguards to ensure your interests are protected when age, illness or injury prevents you from looking after yourself in the way that you would truly want.

The benefits of an Enduring Powers of Attorney can be substantial, and enable a trusted spouse, relative or friend to look after your interests with a minimum of inconvenience.

Sadly, an Enduring Power of Attorney can also be misused, where the person you trusted to look after your interests uses the document to steal from you.  This is occurring more frequently and the Australian Law Reform Commission has just issued a report, which will now be considered by governments around Australia.

We will be talking more about changes to these laws in the future.  Today’s article just contains the basics as a starting point.

1.  Why have an Enduring Power of Attorney?

  • Although we never plan to get ill, it is possible that through either accident or illness you may become temporarily or permanently unable to make decisions for yourself.
  • If you haven’t made arrangements for someone to legally make decisions for you, you have a massive problem for you & your family. Not only do they have the challenges of caring for you, but the added hassles of everyday life which can make the scenario horrendous.
  • An Enduring Power of Attorney allows you to give a person of your choice the authority to make decisions on your behalf if you are incapable of conducting your affairs at any time in the future.
  • An Enduring Power of Attorney is also useful to conduct business on your behalf if you are not physically able to attend to your affairs. This could either be through a physical disability or because you are overseas or out of town for long periods of time.

2.  Do you need a Lawyer?

If it is important to you that the Enduring Power of Attorney is valid, you probably need a lawyer to assist. There have been many scenarios when an Enduring Power of Attorney has been worthless and unable to be used due to a failure in one or more respects.

Whilst the document can appear straight-forward, the expertise of a lawyer in the following areas can be invaluable:

  • Advice as to the scope of the powers, and the ability to limit those powers
  • Establishing the legal capacity of the Principal
  • Ensuring the Principal is provided with the necessary advice prior to signing
  • Ensuring the valid execution of the document
  • Ensuring the Attorney is aware of their responsibilities

3.  What does it cover?

  • An Enduring Power of Attorney generally covers financial and legal matters, including the power to sell property, however you can put conditions or restrictions on what decisions can be made on your behalf.
  • Where you want someone to be able to make decisions about medical treatment, for example decisions about medical or surgical procedures, long term care or whether a life support machine is switched off, you will need an additional document known as an Advanced Health Directive.
  • Regardless of whether medical or personal matters are included, an Enduring Power of Attorney is important as it can cover crucial decisions which need to be made on financial or legal matters when you are not able to make those decisions yourself.

4.  Who should you appoint as an Enduring Attorney?

  • The short answer to this question is to appoint someone you trust – explicitly & unreservedly! A spouse, relative or life-long friend can be the most logical choices when considering who would best know your interests. You can also appoint a professional such as a lawyer or accountant.
  • As they will make decisions for you, discuss your wishes with your Attorney both generally and in specific situations so that they will know what your wishes are.
  • Whomever you appoint as an Attorney, they must be at least 18 years old; be of sound mind (must also have the capacity to make decisions) and agree to be your Attorney.
  • Although one person is most commonly appointed, you can appoint different people for different things, or you could appoint two or more Attorneys to exercise their powers jointly.

5.  Appointing 2 or more Attorneys?

  • If you appoint more than one attorney you need to consider carefully whether you appoint them as “Joint” or “Joint and Several” Attorneys.
  • If you appoint them as Joint Attorneys: they can only do things for you if both sign off on the thing to be done (for instance for bank transactions, the Bank would require both signatures); and if one dies or ceases to be capable of acting, then the other Attorney cannot act alone unless they apply to a Court or Tribunal for approval to do so.
  • If you appoint them as Joint and Several Attorneys: either of them can act independently to do things for you; and if one dies or ceases to be capable of acting, then the other Attorney can continue to act alone.
  • You could also appoint a Substitute Attorney who could act if your appointed Attorney becomes incapable of making decisions or dies.

6.  Problems with Enduring Powers of Attorney

  • There are occasions when an Attorney doesn’t do the right thing ! There has been media coverage of people who have used the Principal’s funds themselves for their own benefit. These people have stolen from the person they are supposed to be acting for as an Attorney.
  • Stealing and dishonesty occurs throughout society, however you can take steps to try and minimise these risks.  Examples include appointing 2 people (who preferably are not closely associated with each other) to act jointly on all decisions. Another example may be appointing someone who is more financially secure in the hope that they feel less of a “need” to steal funds > this idea could be debated!! Another example could be including a requirement for an Accountant to review and/or audit your financial records each year.
  • Where some third party suspects that your Attorney is acting inappropriately, there are legal avenues available to terminate the Enduring Power of Attorney.

7.  When does it come into effect?

  • You can nominate when you want the Enduring Power of Attorney to come into effect: either immediately or only when, or if, you are incapable of making decisions.

8.  What are the formal requirements?

  • The person making the appointment must have full legal capacity at the time of the appointment > over 18 years of age and have the mental capacity to make decisions.
  • The person you appoint must accept the appointment as Attorney.
  • If you grant your Attorney power to sell property this will need to be registered with the relevant state or territory land titles office.
  • There are other formal requirements both as to form and witnesses.

9.  What must the appointed Attorney do?

  • Your Attorney has certain legal duties, including: consider your interests when making decisions as your Attorney; take care of your property; avoid conflicts of interest; and if necessary, prove that they have been appointed as your Attorney.
  • Both the decision to act as an Attorney and the legal duties which come with it are significant. Your choice of person and their acceptance of this role needs to be considered carefully.

10.  Does an Enduring Power of Attorney last forever?

  • You have the ability to revoke your appointment of an Enduring Power of Attorney at any time, as long as you still have mental capacity.
  • An Enduring Power of Attorney ceases upon your death. Once a person dies, the provisions made in their Will or, if the person dies without a Will, the intestacy provisions will decide how the estate is distributed.

Disclaimer: The above is to be considered as general education. This is not advice and it is not to be acted upon without advice from a qualified professional who understands your personal circumstances.

Copyright © 2017 Wockner Lawyers. All Rights Reserved. Contact Wockner Lawyers – [email protected]. This article may not be used without the prior written consent from the author. See below for more details…
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