A power of attorney is a formal instrument by which one person empowers another person to act in their stead for certain legal and financial purposes (e.g. dealing with bank accounts, transferring money, paying bills, dealing with investments, or buying and selling real estate) when they can’t do so themselves.
For example, you might be unavailable to make financial decisions (e.g. because you are overseas or spending time in hospital). Or you might be unable to manage your finances due to serious illness or accident, or loss of mental capacity.
A power of attorney will give that person the authority to act on your behalf. You can appoint an attorney for a limited period, or an indefinite period. The latter applies until you die or revoke it.
A ‘general’ power of attorney ceases to be valid when the person who donated the power loses mental capacity.
For a power of attorney to remain valid after you lose your mental capacity, you must make an ‘enduring’ power of attorney while you still retain mental capacity. An enduring power of attorney is an important consideration for everyone, not just people who are older or with a known illness that may affect mental capacity.
For example, if you have an accident or a sudden illness that causes you to lose mental capacity, nobody will be able to access your assets on your behalf, such as your bank account or superannuation, unless you have an enduring power of attorney. And you might need that money to pay for your medical treatment.
Or your investments might require an important action to be taken, but you might not be in a position to do so.
A family member or a friend could apply to be appointed as your financial manager or administrator, either through a Civil and Administrative Tribunal or the Supreme Court (depending on the State in which you live), but this could take considerable time.
It is therefore in your best interests to have already given someone an enduring power of attorney so they could take the appropriate actions in a timely manner.
Your attorney has full authority to deal with your legal and financial affairs. You should appoint someone you trust. Most people chose either a family member or close friend or a fiduciary company that can act as your attorney.
You may want someone to make decisions on your health, medical treatment and living arrangements if you are unable to do so due to serious illness or accident (e.g. where you should live, what services you should receive and what medical and dental treatment you might need).
Depending on the State in which you live, this person is called an ‘enduring guardian’, ‘attorney’ or a ‘substituted decision maker’ and is appointed under either an Enduring Power of Guardianship, Enduring Power of Attorney or an Advance Care Directive.
Disclaimer: This information has been produced by Australian Unity Personal Financial Services Ltd (‘AUPFS’) ABN 26 098 725 145, of 114 Albert Road, South Melbourne, VIC 3205, AFSL & Australian Credit Licence 234459. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this document represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness. Published: February 2017 © Copyright 2017