Power of attorney – what is it and when might I need one?
Rockliffs Solicitors and IP Lawyers
Publish Date: September 18, 2007
Imagine the following scenario. You can’t access your bank account, so your bills are going unpaid. You can’t sign that important contract, so the deal will fall through. You can’t even give your granddaughter a birthday present. How intensely frustrating this would be! But it could happen easily if you were to fall ill or travel out of reach. Wouldn’t it be convenient if your spouse or business partner could handle these important matters for you?
At Rockliffs, we can do this for you by drawing up a power of attorney.
What is a power of attorney?
A power of attorney is where you, as the principal (sometimes called the donor or grantor) give another person (the attorney) legal authority to act on your behalf. In your absence, your attorney can manage your personal and/or financial affairs.
There are two types of powers of attorney in New South Wales: ordinary powers and enduring powers. Only the latter will continue if you lose the mental capacity to make decisions; ordinary powers will cease to operate if this should occur. As a result, many older people incorporate an enduring power of attorney into their estate planning arrangements, to ensure their affairs and property will be taken care of.
What can my attorney do?
Essentially, your attorney can be authorised to do anything you can legally authorise them to do.
This doesn’t mean that your attorney can do everything. For example, they cannot make life or medical decisions for you.
A power of attorney doesn’t have to come into effect immediately; you can set it up to come into force on a certain date, or when your attorney thinks you need help managing your affairs.
Who should I appoint as my attorney?
They can be given the power to access your bank account and sign legal documents in your name, so you’ll need to choose someone you trust closely.
How do I set one up?
Of course, you can’t just set up a power of attorney on the back of an envelope. You’ll need a formal legal document (or instrument), appropriately signed and witnessed, which will state expressly whether you a conferring an enduring power of attorney or not.
Nor can just any mug off the street act as a witness. Only prescribed witnesses (like our solicitors here at Rockliffs) are permitted to sign. This is because a prescribed witness must do more than acknowledge that they saw you sign. They must certify that you seemed to understand what a power of attorney entails, and that you are aware of the impact of the instrument you are signing. Needless to say, your attorney cannot act as your witness.
Your designated attorney must accept their position by signing the instrument. This can be done either at the time of its creation, or afterwards - just as long as it’s done!
The instrument creating your power of attorney must be carefully drafted if your attorney is to carry out all your intentions. There are all sorts of rules and regulations that govern the operation of powers of attorney. For example, your attorney will not be able to make gifts of your property, unless you specifically permit it. Similarly, your attorney will not be able to take any benefit for themselves, unless you give them authority to do so. So it’s important to get your power of attorney drawn up by an experienced solicitor.
When should I consider getting one?
Having a power of attorney is always a worthwhile precaution, as you never know what’s going to happen. But there are some circumstances in which powers of attorney can be particularly useful. For example, if you’re:
- suffering from a serious or debilitating illness, or undergoing a major operation;
- travelling, either for extended periods or in remote regions where you might not be easily contacted; or
- at retirement age or above, as having a power of attorney may prevent government or court intervention in your affairs, should the day come when you are judged to be no longer capable of managing them.
All of the above apply with especial relevance if you are involved in any important transactions, such as a conveyance, or if you are drawing up your will.
Of course, this article is only a rough outline of the current state of the law in New South Wales. For detailed and personal advice on what would be best for you, please come and see us at Rockliffs Solicitors.
For further information or assistance please contact Rockliffs on 02 9299 4912 or email us at email@example.com