The NSW legislation governing Powers of Attorney is the Powers of Attorney Act 2003 (“the Act”). Other states and territories of Australia have their own legislation governing Powers of Attorney. The Act made some important changes to the law about Powers of Attorney, particularly enduring Powers of Attorney.
A Power of Attorney is a legal document in which you appoint the person or organisation to manage your assets and financial affairs while you are alive, for example, you can authorise your Attorney to collect debts, vote at meetings, operate your bank account, manage your investments or carry out any other function which can be lawfully delegated. If you are travelling overseas you may want to give your Attorney access to your bank accounts to pay your bills or manage your finances. Alternatively, it can be useful to have a Power of Attorney if you become unwell and are no longer able to manage your financial affairs.
Making a Power of Attorney does not mean that you will lose control over your financial affairs. It simply gives your Attorney formal authority to manage your financial affairs according to your instructions. Your Power of Attorney can be revoked at any time provided you have the capacity to do so.
A Power of Attorney only deals with property and financial matters and enables your Attorney to sign legally binding documents on your behalf. It does not give someone the right to make decisions about your lifestyle, medical treatment or welfare, these decisions are covered by an Enduring Guardianship.
A Power of Attorney ceases when you die. The executor named in your Will then takes over the responsibility of administering your estate.
An ordinary Power of Attorney (commonly known as a General Power of Attorney) cannot continue to be used by your Attorney after you have lost your legal capacity to deal with your financial affairs.
An Enduring Power of Attorney continues after you have lost your legal capacity. This is important for everyone, but particularly for elderly people.
Should you no longer be able to manage your financial affairs and you don’t have an Enduring Power of Attorney, NSW Civil & Administrative Tribunal (formerly the Guardianship Tribunal) may have to appoint a financial manager to make these decisions for you. This involves a formal hearing where evidence will be heard to assess if you have lost legal capacity and whether you need to have someone appointed to make decisions on your behalf.
If NSW Civil & Administrative Tribunal decides that you need someone to make decisions about your finances and legal affairs, they will appoint a financial manager. While they have an obligation to take your views into account, the ultimate decision rests with the Tribunal.
The person or organisation appointed as your financial manager will not necessarily be whom you would have chosen. This may be stressful for those involved and can cause considerable conflict and anguish among family and friends concerning who is appointed to make decisions on your behalf. By making an Enduring Power of Attorney, you are ensuring that the person or organisation you nominate to manage your financial affairs is what you want.
It is important to choose your Attorney carefully as they will be responsible for making legal and financial decisions on your behalf. You need to be able to trust that they do not have conflicts of interest, that they can be impartial and will act in your best interests. You should feel confident that your Attorney will competently make any decisions that may need to be made. Being an Attorney is a demanding job which requires special skills. Your Attorney should have the business and financial skills to manage your affairs properly and be capable of keeping accurate records of all dealings and transactions they undertake on your behalf.
Your Attorney must agree to take on the role. Therefore, make sure you discuss your intentions to appoint them as your Attorney and what it is likely to involve before making the appointment. Even though they may be someone you know well and who cares about you, they may find the role too daunting or may feel that they cannot carry it out as objectively as they should. Once you place control of your affairs into the hands of a private Attorney, they have no legal obligation to report to any other person about the management of your affairs. This can leave you vulnerable to mismanagement of your affairs.
In many instances, particularly with Enduring Powers of Attorney, it is likely that, should a person be called on to act as your Attorney, it will not be until sometime in the future. Therefore, a friend or relative who is much older may not be appropriate to appoint under an Enduring Power of Attorney as they may not survive you or be able to take on the role when required.
You may appoint more than one Attorney. When appointing more than one Attorney, you should choose people who co-operate with each other and who you trust to work together in your best interests. You can appoint your Attorneys to act:
A Power of Attorney can only be used in the manner granted. If your Attorney exceeds their authority, legal action can be taken to protect your interests and your Attorney is liable to pay compensation to you if you suffer loss as a consequence.
Your Attorney is in an important position of trust and has a responsibility to always act only in your best interests. They therefore must:
Your Attorney must also recognise your right to confidentiality, and respect your views and wishes, taking into account your existing relationships, values and culture. As a professional Attorney the NSW Trustee & Guardian is able to ensure that their responsibilities as your Attorney are always complied with.
The requirements for witnessing a Power of Attorney differ depending on the type of Power of Attorney, whether it is general or enduring.
A General Power of Attorney (which ceases to be effective if you lose your mental capacity after it is executed) can be witnessed by anyone over the age of 18 years who is not an Attorney appointed under the document.
There are more specific requirements for witnessing an Enduring Power of Attorney (which continues to be effective if you lose your mental capacity after it has been executed). An Enduring Power of Attorney can only be witnessed by the following:
At the end of the Enduring Power of Attorney form there is certificate that must be completed by the witness. The certificate states that the witness:
If the Witness has doubts about your ability to understand what you are signing, they are required to take reasonable steps to confirm your mental capacity.
If you want your Attorney to deal with any real estate you own in NSW, then the Power of Attorney document must be registered with Land and Property Information Division of the NSW Land Registry Services. Otherwise, there is no requirement for your Power of Attorney to be registered. If you choose to register your Power of Attorney it:
After registration, your original document will be returned to you with a registration number stamped on it. Your Attorney should use this number when signing any documents on your behalf. There is a fee charged by Land and Property Information NSW for registering your Power of Attorney.
If your Power of Attorney is registered and you later revoke it (cancel it), you should register the revocation.
You can revoke or cancel your Enduring Power of Attorney at any time so long as you have legal capacity to understand what you are doing when you revoke it.
To revoke a Power of Attorney you must inform your Attorney in writing that you are bringing their appointment to an end. Should you fail to inform your Attorney of the revocation your Attorney can legally continue to make decisions on your behalf. Your bank and any other relevant groups or businesses with which your Attorney may have been dealing should be notified of the revocation. If your Power of Attorney is registered, you should also register the revocation.
After revoking the Power of Attorney you should destroy the original and any copies of the Attorney document you may have.
Questions about Power of Attorneys and what is best for you can be clarified by speaking to one of our experienced lawyers at King Legal. Please make an appointment today.