While no one ever expects to lose the capacity to manage their own affairs, many people receive comfort from knowing that they have planned ahead, and made arrangements for a trusted relative or friend to make decisions on their behalf – if something does happen!
A first step in this planning ahead involves talking to significant people in your life and to discuss and communicate your wishes to them.
A second step involves identifying a suitable person, whom you trust to act for you.
A third step is to decide whether your trusted friend(s) and family could make the decisions you would want them to make – if you lose capacity yourself – and whether you need to make any formal arrangements.
You should be aware, however, that there are some situations, which do require formal legal authority for someone to act on your behalf if you do not have the capacity yourself – for example, accessing your bank account to pay your bills, updating your investments, or in some circumstances, admission to hospital and/or consenting to medical treatment.
What is a Power of Attorney?
A ‘Power of Attorney’ is a document you can sign to appoint another person (called your attorney) to act for you in relation to your financial affairs. The document states exactly what the attorney is authorised to do.
This authority can either be quite narrow and/or very specific, or it can be as general as you wish. Any lawful action taken by the attorney under the Power of Attorney is binding on you, so it is important to appoint someone you trust.
Even though you have appointed an attorney, you can still personally carry out those functions, such as banking and the sale of property, while you retain the ability to do so. Indeed the Attorney should not act or do anything for you unless you specifically request him/her to do so.
When the power of attorney is signed, the document can be given to the attorney, or you can hold onto it until the need arises. When it is provided to your attorney, it can be used to prove that he or she is authorised to act on your behalf.
Who can you appoint as your attorney?
The person you appoint should obviously be someone you trust.
He or she must be 18 years or over.
If you have no one like this, or they are too busy, or do not have the required skills, professional advisors can be appointed as your attorney. They may however charge a service fee for handling your affairs.
Your attorney must formally sign or accept the Enduring Power of Attorney form, to show that he or she consents to act. So before filling in the form you need to ask the person you choose as your attorney if they agree to be so appointed. The attorney can sign the form at the same time as you or at a later time, but it will not start to operate until he or she has signed or accepted the appointment.
Who should you appoint?
It should go without saying that an Attorney should be a person in whom you have absolute trust and confidence to be both honest and reliable and a person who possesses similar, if not identical core values and principles. Because an attorney can be appointed for specific tasks then you can appoint a specific person to do a specific job or to manage a specific interest or business and appoint another person to do other things if the relevant persons have specific skills or qualities for each of those relevant tasks. The attorney should not be a person who will be intimidated by documentation or “red tape”.
Ideally any attorney will have a commercial and business acumen however it is possible for an attorney to source any necessary advice for you, in relevant circumstances, if you so wish.
If you are ever in doubt in relation to whether or not you think a person may be an appropriate person then discuss it with them and brief them on what it is that you are wanting them to be able to do, should the need arise and this should facilitate and enable you to have confidence that the person (or persons) who you intend to appoint will be not only appropriate but effective attorneys for your needs.
How Long Does a Power of Attorney Last?
A power of attorney continues for as long as you want it to, but it can also be cancelled at any time while you have the capacity to make the decision. It can also last for a set period of time, for example while you are ill or while you are overseas.
By law, a power of attorney (which is not enduring) ceases to operate if you lose the ability to make decisions (or when you die).
If you have any questions or if you wish to discuss these findings in any way then do not hesitate to contact our Wills & Estate lawyers on 02 9232 8033.