While it sounds intimidating and highly formal, a Power of Attorney is actually a relatively simple (but very important) part of your Estate Plan.
A Power of Attorney is a legal document where one person (normally known as the Principal) gives another person the power to make financial and medical decisions on their behalf while they're still alive. The power of attorney act allows you to appoint someone to make your own decisions for an extended or specific period if you've lost capacity. This can cover medical treatment decisions and health care, as well as important decisions on lifestyle and financial affairs.
There are two types of Powers of Attorney a person can make, a financial Power of Attorney, and a medical Power of Attorney.
Financial Powers of Attorney grant the appointed attorney legal capacity to manage a person's financial and legal affairs, which includes:
The decision makers appointed under a financial power of attorney are normally known as Attorneys. Appointing someone as your Financial Power of Attorney just means that you have appointed that person to make decisions on your behalf. It does not mean that the person is a solicitor or lawyer.
Similarly, they may be unable to make your personal decisions on lifestyle, mental illness or service provider for your healthcare treatments.
Medical Powers of Attorney allow a person to choose a decision maker to manage their health and lifestyle affairs, including:
Medical Powers of Attorney with authority to take reasonable steps on important personal matters, have different names in each State.
For example in NSW, TAS and WA a medical power of attorney is called an ‘Enduring Guardianship', in SA and the NT they are called an ‘Advance Personal Plan' or 'Advance Care Directive', in VIC they are called a 'Medical Treatment Decision Maker' and in the ACT they are classically known as a Medical Power of Attorney. See all the States and Territories below.
The decision makers appointed under a medical power of attorney are normally known as Guardians. This guardianship order should not be confused with the person that you appoint as the guardian of your underage children in your Will (although you could choose to use the same person).
If you appoint an enduring guardian, they will have the power to make treatment decisions or deal with financial matters if you are unable to do so. This will allow them to act on these lifestyle, personal, legal and money matters for the duration of your lost capacity.
Depending on the State that a person lives in, the powers that can be delegated to an Attorney or the conditions to make an enduring power of attorney may vary. As such, it is advisable to consult each set of laws separately.
If you choose to create your Powers of Attorney with Safewill, you can take comfort knowing that they have been tailored to each State, and our hints will provide information relevant to your State as you complete your document.
Your Will and your Powers of Attorney function at different times to carry out the right decisions for you and safeguard your wishes.
Powers of Attorney come into effect while you are still alive but lack capacity to make decisions for yourself. Under the Power of Attorney documents, you appoint a nominated person to make decisions on your behalf that affect either your financial or health affairs (or both). The effect of the Power of Attorney ends when you pass away.
Your Will, on the other hand, only comes into effect once you pass away. Under your Will, you appoint an Executor to carry out the wishes in your Will, and manage the transfer of your assets to the required beneficiaries upon your death.
Life is unpredictable, and part of being an adult is putting plans into place that cover scenarios of decision making disability which you may not want to think about. Power of Attorney appointments represent crucial legal documents which ensures a trusted family member, friend or associate, is authorised to step in when needed.
Powers of Attorney are particularly important if something unexpected were to happen- allowing you to feel confident for any future where aren't able to make decisions that need to be made for your best interest. In this situation:
Without Powers of Attorney in place, if you lose capacity, your loved ones may have to go through alternative, lengthy supreme Court or Tribunal processes to be legally appointed as your substitute decision-maker.
There is also a chance that a Court or Tribunal will not appoint the person you would have otherwise chosen to make these decisions for you.
Making Powers of Attorney while you are mentally capable is the best way of safeguarding the decision making process for your family down the track.
If the time comes when you need a trusted “understudy” to step in, you'd want them to have learned their part right? Appoint a POA who knows and understands your wishes and life plans, and can make decisions that you'd be comfortable with.
Because your POA can effectively have the same legal standing to make decisions as you would have, they should be someone you trust completely, and who has your best interests at heart. They will need to separate their own feelings from the decisions they have to make, and have the confidence to handle the varying opinions of family, friends and medical providers.
A Power of Attorney can generally be given to anyone over the age of 18 including:
For financial matters, you could also choose to appoint a professional POA, such as a solicitor or accountant. While this option removes the burden from a family member or close friend, it does generally come with an associated cost.
There are a few restrictions on the types of people that can be appointed as Attorney depending on your state or territory. In all places, you cannot appoint a bankrupt person as your financial attorney. Similarly, you generally cannot appoint your doctor or other medical provider as your medical power of attorney.
It's possible to have more than one Attorney, and in this case you would decide whether your Attorneys have the power to act:
You can likewise appoint backup Attorneys to fulfil the role if anything were to happen to your primary Attorneys.
Your Attorney has a duty under the law to always act in your best interests and not to directly benefit from their role unless you specifically want them to. Keeping your money and assets separate from theirs is a key part of this duty.
Your Attorney also has to keep accounts of actions taken and decisions made, backed up by proper records and evidence.
A Medical Power of Attorney only comes into effect once you lose the ability to make decisions for yourself
A Financial Power of Attorney comes into effect at the time that you specify in the document. You can have your Financial Power of Attorney operating either:
If you choose to create your Powers of Attorney with Safewill, they will only come into effect at the time when you are unable to make decisions for yourself.
Generally, there is only one type of medical Power of Attorney in each State.
For financial Powers of Attorney however, there are a couple of options:
The Safewill Powers of Attorney are Enduring Powers of Attorney. If you would like to make a General Power of Attorney, you will need to seek separate assistance or advice.
As Principal, you can cancel a Power of Attorney at any time, as long as you have the mental capacity to do it. If you appoint an enduring guardian and they pass away, this appointment also ceases to operate- and in this case, the Executor of your Will would step in to handle the affairs of your Estate.
When revoking (cancelling) a Power of Attorney, it's important to formalise the situation by putting it in writing.
Some states and territories require specific forms to be completed to revoke a Power of Attorney (especially an Enduring Power of Attorney) and it's necessary to refer to the relevant public authority for more information about revocation in your state or territory.
In some states and territories, situations such as marriage, civil partnership, divorce or the end of a civil partnership will automatically revoke an Enduring Power of Attorney.
In all cases, if your Attorney becomes bankrupt, loses mental capacity, passes away or resigns from the appointment, and you haven't appointed any back-up Attorneys, your Power of Attorney will no longer have any effect.
Generally speaking, a Power of Attorney document created in one Australian state or territory will be accepted in another Australian state or territory. However each State does have slightly different requirements, and so you should consult each State's requirements to confirm validity in your particular circumstance.
All states and territories have an approved form to make a Power of Attorney, which meets the requirements of the relevant legislation.
Completing this form can be tricky, and if you do not fill it in correctly the appointment may not be valid. For this reason, many people use an online service like Safewill to write their Power of Attorney, or visit a lawyer to assist with the drafting.
In all states except Tasmania, it is not a legal requirement to register your Power of Attorney. In Tasmania, your financial Power of Attorney will not be valid until it is registered.
Registering a Power of Attorney usually involves filling out a registration form, and sending it together with your original signed Power of Authority to the relevant government body. If you need to register your Power of Attorney, you should consult your State's particular registration requirements.
Another important thing to remember is that in most States, you will need to register your Power of Attorney before your Attorney can make decisions about real estate (such as buying or selling your house).
The laws surrounding the power of a financialAttorney to give gifts varies depending on which state or territory you live in. In some places, the power to give gifts must be stated in an Enduring Power of Attorney, and in some states and territories, there are limits placed on the power.
To make a valid Power of Attorney the document needs to be signed by you and properly witnessed. It also needs to be signed by the people you are appointing as your decision makers.
In some States, the decision makers will also have to sign in front of a witness.
The eligibility criteria to witness a Power of Attorney, as well as the number of witnesses required and whether a witness needs to “certify” that the person appointing an Attorney has the capacity necessary to do so all vary depending on the state or territory concerned. The relevant Powers of Attorney legislation in each jurisdiction comes into play here and it's important to get information from the relevant public authority listed below to confirm requirements.
A Power of Attorney, like other crucial estate planning documents, should be made before you lose capacity. Much like the Will, Power of Attorney forms should be kept in an accessible location should the need for it arise.
Safewill offers a quick and affordable way to make your Will and Powers of Attorney in a few easy clicks. Granting you the power to decide who will take over your financial matters, treatment decisions and personal lifestyle factors should you lose capacity.
If you need any further information about Powers of Attorney, we recommend seeking legal advice.