What is a Power of Attorney?
A Power of Attorney is a powerful legal tool that grants someone the authority to act on your behalf, making decisions and taking actions when you are unable to do so.
It can be thought of as giving authorisation to someone else (your attorney) to step into your shoes and make decisions as if they were you.
This can be a powerful mechanism, that will give you and your family peace of mind in situations where you are unable to make critical decisions yourself, including the unfortunate event of you becoming incapacitated due to sickness or lacking mental clarity.
This article is concerned with POA in NSW. The process differs in Australia by state.
Different Types of Power of Attorney?
There are two primary variations – the General Power of Attorney and the Enduring Power of Attorney.
The key distinction between the two is that a General Power becomes invalid when you lose mental capacity, while an Enduring Power remains effective even if you become incapacitated.
|Difference between different Power of Attorney Types
|Enduring Power of Attorney
|General Power of Attorney
|Appointee manages financial and legal decisions even if you no longer have the ability to make your own decisions
|Appointee manages financial and legal decisions only while you have the ability to make your own decisions
Imagine you have granted your friend a General Power of Attorney to handle your finances. If, at any point, you become incapacitated, perhaps due to an accident or illness, the authority granted to your friend under the General Power of Attorney ceases to exist.
However, with an Enduring Power of Attorney, your friend can continue managing your financial affairs even in your absence.
Why Do People Need a Power of Attorney?
Life can be unpredictable, and situations may arise where you are unable to make decisions for yourself.
Here are some real-life scenarios where a POA can be a lifesaver:
- Medical Emergencies
Let’s say you’re in a car accident and are unable to communicate your medical treatment preferences.
If you’re planning on spending a long time overseas and need someone to manage your financial affairs or property in your absence.
You may want to delegate key decisions to another person to manage financial decisions and investments.
What Can a Power of Attorney Actually Do?
The powers granted under a Power of Attorney can be quite extensive or limited, depending on your preferences.
in NSW, the scope of an attorney’s authority is restricted to financial and legal decisions, including:
- Authorising signatures on legally binding documents
- Managing bank accounts
- Handling bill payments
- Facilitating real estate transactions
- Overseeing investments
- Administering rent collection.
Remember, these powers are subject to your specific instructions, so you have the flexibility to tailor the Power of Attorney to your needs.
What Are the Attorney’s Duties?
Your attorney has a legal and ethical duty to act in your best interests. These are defined in the Powers of Attorney Act 2003.
This means they must make decisions that align with your preferences, even if those preferences change over time.
Attorneys are legally bound to adhere to the following responsibilities:
- Base decisions on the Principal’s presumed preferences and wishes, considering their desires.
- Manage the Principal’s affairs conscientiously, prioritising their best interests and maintaining meticulous records.
- Avoid mingling funds to prevent any conflicts of interest.
- Conduct themselves with integrity and in a trustworthy manner.
- Collaborate with other decision-makers as necessary.
- Make decisions that impose the least restrictions on the Principal’s personal freedom.
- Promote the Principal’s active involvement in decision-making, daily life, and community engagement.
- Safeguard the Principal from any form of negligence, abuse, or exploitation.
- Operate within the bounds of their appointment, which includes adhering to specified start dates, powers, and limitations.
Who Should I Select as My Attorney?
Choosing the right person to be your attorney is a decision that should not be taken lightly. It requires someone you trust implicitly, who understands your values, and is willing to act in your best interests.
It is also important that the appointed individual is willing and able to take on this responsibility – don’t assume that a close friend or loved one is comfortable shouldering this responsibility.
Your chosen Attorney should be at least 18 years old and possess the capacity to make the necessary decisions.
The options for selecting your attorney include:
- A family member
- A close friend
- A qualified solicitor
- NSW Trustee & Guardian or a trustee organisation.
Keep in mind that your attorney is legally obligated to act in your best interests. Therefore, it’s vital to choose an individual or organisation that:
- Will not engage in any actions that could create a conflict of interest, such as benefiting themselves using your assets.
- Possesses the requisite financial skills to handle matters like taxation and financial planning competently.
- Ensures a clear separation of their finances and assets from yours.
- Respects your values, wishes, existing relationships, cultural background, and personal beliefs.
- Upholds your right to confidentiality regarding sensitive information.
- Adheres to any limitations or conditions placed on their authority as outlined in the Power of Attorney document.
- Maintains accurate records of all their transactions and dealings on your behalf.
You will need to have open and honest conversations with your chosen attorney about your expectations and desires.
How Do I Register My Power of Attorney?
To designate one or more Attorneys, you’ll need to complete a specific form that outlines:
- The identity of the individual(s) you are appointing.
- The scope of decisions you wish them to make.
- Whether there are any specific decisions you do not want them to be authorised to make.
If you are appointing an Enduring Attorney, you must sign the form in the presence of a designated witness. This witness can be:
- A legal professional.
- An employee of NSW Trustee & Guardian.
- A Registrar of the Local Court.
Additionally, your chosen Attorney must also sign the form to formally accept their appointment.
For any Power of Attorney granted to manage real estate, you will also need to register it with the Land and Property Management Authority (LPMA).
Furthermore, it’s advisable to provide a copy of the signed Power of Attorney to your lawyer and share copies with your bank and any other financial institutions with which you have accounts.
Maintaining a list of entities to which you’ve given copies of your Power of Attorney is a prudent practice.
Does the Attorney Have to Be in the Same State as Myself?
However, an Enduring Power of Attorney drafted overseas will not be acknowledged or recognised in NSW.
If an Enduring Power of Attorney originated in a different State or Territory, it will be acknowledged in NSW as long as it adheres to the legal requirements of the State or Territory in which it was created and aligns with the powers that are valid in NSW.
Conversely, an Enduring Power of Attorney established in NSW might be considered valid in another State or Territory of Australia, contingent upon compliance with the relevant interstate laws and recognition protocols.
How Do I Change or Cancel an Existing Power of Attorney?
In NSW you can always revoke your power of attorney. However this can only be done while you are still sound of mind, so it should never be left until it is too late.
To revoke or cancel a Power of Attorney, thereby preventing the appointed individual from making decisions on your behalf, you must take specific steps. These include:
- Disposing of any copies of the Power of Attorney document.
- Notifying relevant parties, which typically include:
- The designated Power of Attorney.
- Your bank, financial institution, or any other pertinent organisations with which your attorney may have been involved.
- In the case of registered Power of Attorneys, you must also inform the NSW Land Registry Office.
It is highly advisable to seek legal guidance both before and after making these adjustments.
Power of Attorney FAQS
What is the Difference between a Power of Attorney and an Enduring Power of Attorney?
The primary difference lies in the enduring aspect.
A regular Power of Attorney becomes invalid when you lose mental capacity, while an Enduring Power of Attorney remains effective, allowing your attorney to continue managing your affairs even when you can’t make decisions for yourself.
Who Is the Best Person to Be Power of Attorney?
The best person to be your attorney is someone you trust implicitly, who understands your values and is willing to act in your best interests.
This could be a family member, a close friend, or a legal professional. The key is to choose someone who is responsible and committed to fulfilling their duties.
What Are the Limitations of a Power of Attorney in NSW?
The limitations of a Power of Attorney in New South Wales (NSW) can vary depending on the specific powers granted in the document.
It’s essential to be clear about these limitations to avoid any misunderstandings or potential misuse of authority.
What Is the Difference between a Power of Attorney and Enduring Guardianship?
A Power of Attorney deals primarily with financial and legal matters, whereas an Enduring Guardianship is concerned with healthcare and lifestyle decisions.
An Enduring Guardian is responsible for making choices about where you live, what healthcare you receive, and other personal matters when you’re unable to make these decisions yourself.
What’s the Difference Between a Medical POA and a Financial POA?
A Medical POA, often known as enduring guardianship in NSW, is responsible for decisions related to your healthcare, lifestyle, and medication choices.
A Financial POA manages aspects like investments, rent, legal documents, debts, and property matters, depending on the specific authority you’ve granted. These two types of POAs serve distinct purposes, with the medical POA focused on your health and well-being and the financial POA handling financial and legal affairs.
Power of Attorney is a versatile and valuable legal tool that can protect your interests and ensure your wishes are upheld when you’re unable to make decisions.
It is a crucial element of long term estate planning, alongside your will and Enduring Guardianship.
If you require assistance with any aspect of establishing Power of Attorney, and estate planning generally, get in touch with our team – we’d be happy to assist.
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