A power of attorney is like insurance. If you have not planned
for the worst when the unexpected occurs you might find that you,
your legal and financial affairs and your family and friends all
suffer to a much greater degree than necessary. Angela Harvey,
partner, and Euge Power, solicitor, provide some Q&A to
demystify this topic for those interested in eliminating some of
the risk to themselves and others in life.
What is a Power of Attorney?
An attorney is a person with authority to manage another
person's legal and financial affairs. A power of attorney is
therefore a legal document that gives the power of an attorney to a
person to manage another person's legal and financial affairs.
The attorney can be anyone over 18. Commonly people appoint a
relative, friend or professional adviser as their attorney.
There are two types of power of attorney – a
general power of attorney and an enduring power of attorney.
What is a general power of attorney?
A general power of attorney provides the power for another
person to handle your legal and financial affairs for a short
period of time, or in relation to a particular matter. This can be
useful if you are going overseas and need someone to look after
your affairs or a particular issue which may arise while you are
away. It ceases to be effective upon the principal lacking
capacity (or as otherwise set out in the document).
What is an enduring power of attorney?
An enduring power of attorney is a power which endures past the
point where the principal has lost mental capacity. It can be
useful because as you get older, and eventually lack capacity, you
may have difficulty looking after your legal or financial affairs,
and your attorney can manage those affairs for you.
An enduring power of attorney does not grant your attorney the
power to make decisions in regard to personal or health related
issues. An enduring guardian document, while similar, is a
different document to be signed to appoint someone to look after
your personal, medical treatment and health treatment in the event
that you later lack the capacity to make those decisions
Can companies sign power of attorney
Yes, and a thorough estate plan should include powers of
attorney for family companies, to ensure that the company can
continue to run seamlessly after a director loses capacity.
Company power of attorney documents can also be an efficient way to
appoint persons to sign on the company's behalf who may not be
What should I look out for?
Have it before you need it
A power of attorney is a document you need to have ready before
it is needed. Whether it is a general power of attorney because of
travel, or an enduring power of attorney because of an accident or
sudden illness, you may be prevented from giving these powers to
those you trust because of the sudden circumstances in which you
Be careful – It is an important power
Although an attorney must always act in your best interest,
issues can and do arise when an untrustworthy attorney is
The law in this area is changing
There have been recent changes to the law in regard to powers of
attorney, being amendments to the Powers of Attorney Act 2003 and
the Powers of Attorney Regulation 2011. The new forms
(a separate document for enduring power of attorney and a separate
document for general power of attorney) became available for use on
13 September 2013. Before these changes, there was only one
form to be used for both types of power of attorney, so now it is
much easier to distinguish between the different types of power of
attorney to be signed.
Other changes include: changes to the method of appointment of
substitute attorneys; changes in regard to joint attorneys; and
changes to the provision in the document to be signed by the
attorney. Now, attorneys must acknowledge their
responsibilities in clear terms as follows:
" I accept that I must always act in the principal's
I accept that as attorney I must keep my own money and property
separate from the principal's money and property.
I accept that I should keep reasonable accounts and records of
the principal's money and property.
I accept that unless expressly authorised, I cannot gain a
benefit from being an attorney.
I accept that I must act honestly in all matters concerning the
principal's legal and financial affairs."
Get the right advice
A power of attorney may never be used, but it is an essential
document for those who would like to keep those they trust in
control of their legal and financial affairs. The changes in the
law and the importance of the topic mean this is the perfect time
to make sure your affairs are in order.
If you are doing a Will, or you are the executor of a deceased estate, consider what taxes and duties could be payable.
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