Do I need a Power of Attorney?

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

• It is impor­tant that you trust the per­son you are appoint­ing as attor­ney to make finan­cial deci­sions on your behalf. They must be over 18 years old and must not be bank­rupt or insol­vent. If your finan­cial affairs are com­pli­cat­ed, you should appoint an attor­ney who has the skills to deal with com­plex finan­cial arrange­ments.
• A pow­er of attor­ney can­not be used for health or lifestyle deci­sions. You should appoint an endur­ing guardian under the Guardian­ship Act 1987 if you want a par­tic­u­lar per­son to make these deci­sions. For fur­ther infor­ma­tion, con­tact the Civ­il and Admin­is­tra­tive Tri­bunal or NSW Trustee and Guardian.
• If you need a pow­er of attor­ney for inter­state or over­seas, you may need to make a pow­er of attor­ney under their laws. The laws of some oth­er States and Ter­ri­to­ries in Aus­tralia may give effect to a NSW pre­pared Pow­er of Attor­ney. How­ev­er, you should not assume this will be the case. You should con­firm with your legal advis­er whether the laws of the State or Ter­ri­to­ry con­cerned will in fact recog­nise this pow­er of attor­ney.
• Your attor­ney must keep the attorney’s own mon­ey and prop­er­ty sep­a­rate from your mon­ey and prop­er­ty, unless you are joint own­ers, or oper­ate joint bank accounts. Your attor­ney should keep rea­son­able accounts and records about your mon­ey and prop­er­ty.
• If your attor­ney is sign­ing cer­tain doc­u­ments that affect real estate, the pow­er of attor­ney must be reg­is­tered at NSW Land Reg­istry Ser­vices.
• An attor­ney must always act in your best inter­est. If your attor­ney does not fol­low your direc­tions, or does not act in your best inter­est, you should con­sid­er revok­ing the pow­er of attor­ney. You will only be able to do so whilst you retain capac­i­ty.
• If you revoke the pow­er of attor­ney you should noti­fy the attor­ney of the revo­ca­tion, prefer­ably in writ­ing, that they are no longer your attor­ney. The attor­ney must stop act­ing imme­di­ate­ly once they have knowl­edge of the revo­ca­tion.
• A pow­er of attor­ney does not auto­mat­i­cal­ly revoke ear­li­er pow­ers of attor­ney made by you. If you have made a pre­vi­ous pow­er of attor­ney which you do not want to con­tin­ue, you must revoke the pre­vi­ous pow­er of attor­ney by serv­ing a notice on your pre­vi­ous attor­neys.

(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 info@dohlaw.com.au.