A Power of Attorney is a legal document that allows you to elect a person, trustee or organisation to manage your financial and property affairs on your behalf while you are alive; this person or organisation is known as your attorney.
A Power of Attorney document is just as important to life and estate planning as implementing a Will, however it often doesn’t receive the same attention.
So, the question is, do you need a Power of Attorney and what are the implications if you do not have one?
Reasons why you should have a Power of Attorney
Creating a Power of Attorney does not mean you will lose control
A Power of Attorney gives your attorney formal authority to administer your financial and property affairs either under your instructions or if incapable of such then with your best interests considered in exercising the Power of Attorney. Your attorney will be able to sign legally binding documents on your behalf. You can revoke your Power of Attorney at any time, provided you have the capacity to do so.
You may be travelling
Whilst you are travelling you may want your attorney to have access to your bank accounts to pay your bills or manage your finances whilst you are away, so you don’t have to.
You may become unwell or lose capacity
You may lose the ability to make decisions for yourself and can no longer manage your financial or property affairs; your attorney will be able to do this on your behalf whilst considering your best interests.
You do not want to conduct your financial management personally
The management of your finances and associated tasks may have become too much for you to handle on your own, and therefore, your appointed attorney would be able to support and organise this for you.
You do not want family or friends to manage your finances
You can appoint a company, trustee or the NSW Trustee and Guardian as your attorney to manage your finances on your behalf if you do not want to stress your family or friends or do not wish to choose them as your attorney.
You can use a Power of Attorney for several financial purposes
Your attorney will have the legal power to collect debts, represent you and speak at meetings, operate your bank account, manage your investments and carry out any function which can be lawfully delegated.
Important Information about a Power of Attorney
(Extract from Powers of Attorney Regulation 2016 NSW Schedule 2 Prescribed Forms for Power of Attorney — Important Information)
Potential risks involved if you do not have a Power of Attorney
The NSW Civil and Administrative Tribunal will appoint a financial manager
If you do not have a Power of Attorney in place and you are no longer able to manage your finances, the NSW Civil and Administrative Tribunal will appoint a financial manager to make these decisions for you.
You will not choose your financial manager
The financial manager the NSW Civil and Administrative Tribunal will appoint might not have necessarily been whom you would have chosen if you had the capacity to do so. This can cause stress to your family.
Applications to tribunal can incur avoidable costs
NSW Civil and Administrative Tribunal matters may be contested by your family; however, this can incur avoidable costs if a Power of Attorney was originally in place.
Our ‘Preparing your Wills and Estates’ e-guide will arm you with the key information you need to know about preparing your Will and Estate, download the free guide here.
Should you require any further information on Wills and Estates, please contact us on (02) 6583 0400 or firstname.lastname@example.org.