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  • Writer's pictureJusteen Dormer

The Power of Attorney

What is a Power of Attorney?

A Power of Attorney (POA) is a legal document that empowers one or more persons to manage financial and legal matters on behalf of someone else, known as the principal. There are two types of POA, they are:

  1. General Powers of Attorney – Empowers the attorney to make the above decisions on the principal’s behalf only while they have the ability to make decisions for themselves; and

  2. Enduring Powers of Attorney – Empowers the attorney to make the above decisions on the principal’s behalf and continues even if the principal loses the ability to make their own decisions.

What Can an Attorney Do?

power of attorney

An attorney has the ability to make any decisions in law that the principal can. For example, they can buy and sell the principal’s assets, pay their bills, and sign legally binding documents on their behalf.

However, you can, when appointing your attorney, limit their powers so that they can only exercise certain functions. For example, you may limit your attorney to only managing your investment portfolio, selling your house, or paying certain bills.

POAs must also act within their responsibilities. They must:

  • Avoid conflicts between the principal and their interests;

  • Keep their money separate from the principal’s;

  • Maintain proper records of their dealings;

  • Not pay or give benefits to themselves (unless explicitly authorised by the principal); and

  • Act in the principal’s best interests at all times.

Why Do I Need a Power of Attorney?

General POAs are executed for many reasons. Those living abroad may find it is a more convenient way to manage their finances, whilst others may just wish to have their finances managed by someone with more experience than they have.

Most commonly, people towards the end of their lives, execute an Enduring POA in anticipation that they might suffer from a temporary or permanent loss of capacity rendering them incapable of managing their own affairs. If a person loses capacity and doesn’t have a valid Enduring POA, there will be no one with legal authority to make financial decisions on their behalf. This may cause issues as no one is legally able to access the person’s finances to pay their bills, or (as is commonly encountered in family situations) to sell the person’s home in order to facilitate a move into aged care. In such circumstances, a relative or another person may need to apply to the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) or the Supreme Court of NSW to have a financial manager appointed, and the appointed person may not be who the principal would have chosen.

Who Should I Appoint as my Power of Attorney?

Because of the vast power given to an attorney, you should only ever appoint someone you trust to act in your best interests and who is willing to take on the role. You may appoint more than one person, and if you choose to do so you should consider whether you wish for them to only be able to make decisions jointly, or whether you are happy for them each to make decisions individually.

Commonly, people choose to appoint family members or a trusted solicitor as their attorney. However, if you don’t consider anyone you know to be suitable, you may appoint the NSW Trustee and Guardian. It should be noted that the NSW Trustee and Guardian will charge a fee to draw up a POA (unless you are on a full Centrelink Age Pension) and if they are required to act they will charge you for their services.

What If My Power of Attorney is Not Using their Power Correctly?

Whilst you still have capacity, you may revoke your POA at any time. In order for the revocation to be effective, it must be communicated to the attorney, otherwise, they may continue to deal with your finances and property on your behalf.

In the event that you have lost capacity and the attorney appointed under your Enduring POA is not acting in your best interests or is acting either dishonestly or improperly, someone else concerned about your welfare may apply to NCAT or the Supreme Court to have their actions scrutinised and possibly removed. However, this is a stressful and often drawn-out process which makes the decision of who to appoint as your attorney in the first place a crucial one.

Want to learn more? Ready to talk to a lawyer? Get in touch with us.



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