Australia: Power of Attorney in NSW - changes are here!

Last Updated: 21 November 2013
Article by Angela Harvey and Euge Power

In Brief

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 yourself.

Can companies sign power of attorney documents?

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 directors. 

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 find yourself.

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 chosen.

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:

  1. " I accept that I must always act in the principal's best interests.
  2. I accept that as attorney I must keep my own money and property separate from the principal's money and property.
  3. I accept that I should keep reasonable accounts and records of the principal's money and property.
  4. I accept that unless expressly authorised, I cannot gain a benefit from being an attorney.
  5. 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.

For further information please contact:

Richard Ottley, Partner
Phone: + 61 2 9233 5544

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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