Power of Attorney: An Essential Legal Document

A Power of Attorney is a legal document that authorizes who you want to manage your personal affairs when you are no longer capable of managing your own affairs.

Power of Attorney is a simple legal process that can be created by almost anyone.

What is a Power of Attorney?

An Enduring Power of Attorney is a legal document that outlines who you would like to manage your affairs; such as when you no longer have physical or mental capacity to do so or when you go interstate or overseas for an extended period of time.

People can lose capacity for decision making for reasons such as intellectual or psychiatric disability, acquired brain injury, dementia or temporary illness such as delirium. Sometimes people just become too old to manage their own affairs. Anyone over 18 who has capacity can make an Enduring Power of Attorney.

Anyone of legal age can create a Power of Attorney. And you can appoint anyone to be your Attorney. Typically, you would appoint a family member to manage your affairs if you became ill or incapacitated.

Note: If you appoint a lawyer as your Attorney (for your Power of Attorney) they will charge considerable fees to manage your affairs.

An Enduring Power of Attorney is only valid while you are still alive.

On your death, a Will is a legal document that only comes into effect.

Read our post on Why You Need a Legal Will

Who Should Make an Enduring Power of Attorney?

Losing capacity does not just happen to people who are ageing. A loss of capacity can happen at any time in a person’s life and this loss may be temporary or permanent. If you are over 18 and have capacity to understand the nature and the effect of the power you are giving an Attorney, it’s important you plan for your future by making an Enduring Power of Attorney.

It is possible to prepare an Enduring Power of Attorney yourself. However, the document must be witnessed correctly. In addition, you may need assistance with specific clauses to ensure your Enduring Power of Attorney meets your needs.

For example some people like to include a consultation clause or an accountability clause to specify who your Attorney/s must consult with or be accountable to, when they are making decisions and managing your affairs.

What is an Attorney?

An Attorney is the person you nominate to manage your affairs. A power of attorney gives someone the authority to do things on your behalf. For example, the person you appoint can sell and buy another home on your behalf. With a power of attorney, you don’t need to keep running off to a government department to get permission to do something.

“An Enduring Power of Attorney is like insurance… something most people now recognize as being desirable and necessary to mitigate the effects of possible future trauma in their lives.”

You can have more than one Attorney.

Appoint an Attorney/s to manage your financial matters and/or your personal and health matters.

You can specify when your Attorney/s powers begin and you can also specify what powers they will have. You must define the ‘limits of your Attorney(s) powers’.

The term Attorney does not refer to a lawyer, it refers to your principal decision-maker under an Enduring Power of Attorney. When talking about Enduring Powers of Attorney, you can nominate any person over 18 to be your Attorney for health, personal and/or financial matters.

An Attorney is personally accountable for their actions. If your Attorney mismanages your affairs whether deliberately or by negligence; they can be held liable for their actions. This can include facing court proceedings to recover money and even criminal charges.

Who Do I Appoint as My Attorney?

Your attorney has to be over 18 years of age. It should be someone you trust. People often appoint their spouse and then up to two children.

You should avoid appointing a lawyer as your power of attorney because it will become very expensive. Every time you want something done the lawyer will charge a minimum of one hour to perform the task, no matter how simple it is. Most people simply don’t trust lawyers enough to give them total control over someone’s affairs. There have been too many cases of lawyers overcharging, questionable professional conduct and lawyers committing frauds. My advice is to keep it in the family or a friend of the family.

What are the Attorney’s Duties?

Your attorney must:

• act in your best interests at all times;
• act honestly and protect your assets;
• prepare and keep records of all dealings and transactions; and
• not renounce a power during any period of your legal incapacity, except with the permission of the Public Guardian/Court.

Can I Prepare an Enduring Power of Attorney Myself?

Yes. You can make an enduring power of attorney yourself using a pre-prepared form. Purchase or download a template POA and follow the instructions to complete every section.

The problem is that you often only find out about the deficiencies when it is too late to prepare and sign another power of attorney.

If a person helps you to prepare a Power of Attorney and it is wrong then you may be able to sue the person who gave you the help. You should talk to your Accountant and Financial Adviser on the powers you need in a power of attorney and only a lawyer can professionally give you advice on preparing a power of attorney document itself.

Power of Attorney Kit

For under $50 a Power of Attorney Kit will provide you with all you need to write a Power of Attorney for you, a relative or friend.  The Kit will contain background information on the law, instruction on how to complete and execute the document, examples of different types of Powers of Attorney including General POAs, Enduring POAs (including POAs for Medical Treatment) and how to revoke a Power of Attorney.

A Power of Attorney Kit can:

• give you peace of mind if you are suffering ill health;
• give you peace of mind when you travel; and
• save you hundreds of dollars in legal fees.

What Does it Cost to have a Professionally Prepared POA?

Most lawyers charge a fixed fee to prepare your enduring power of attorney. The cost is usually fairly low as it only takes an hour to prepare. The cost varies depending on service inclusion:

• customizing your power of attorney to suit your needs
• advising on whether your POA should be Cascading and Mutual
• arranging for 2 persons to witness your power of attorney
• at your request, storage of your power of attorney in safe custody

Why is a Cascading Power Of Attorney?

A power of attorney is cascading if it has back up people to act as your attorney. For example, you may appoint your spouse and then up to two of your children if you become of unsound mind. If your spouse cannot act as your attorney then the power is transferred to the first child then the second child.

What Does an Attorney for Financial Matters take care of?

A financial Attorney can perform a range of duties such as:

• paying your bills on time
• preparing your tax returns
• managing your investments

When Does the Power of Attorney Take Effect?

You have a choice of when an enduring POA can come into effect:

• make the power of attorney come into effect from the moment of approval with a signature (common for husband and wives); or
• it can come into effect only when you become mentally or physically impaired (common for children).

How hard is it for my attorney to prove that I am of unsound mind?

Your attorney must prove to a government official that you are unable by reason of mental disorder to make reasonable decisions.

Most people make a Mutual Power of Attorney that comes into effect immediately with their spouse. If they become of unsound mind then it comes into effect for 1 or 2 of their children as well.

When Can I Make and Revoke the Power of Attorney?

While you have the mental capacity you can make and then revoke your power of attorney at any time.

If there is doubt about your legal capacity speak to your doctor. Your doctor can give you a note stating that you are competent to sign.

What does an Attorney for Personal and Health Matters take care of?

An Attorney for personal matters can attend to things such as where you will live, who you will live with and your recreational activities.

An Attorney for health matters can attend to certain medical decisions, treatment options and medicines.

Where Do I Register a Power of Attorney?

There is no need to register or stamp the power of attorney. It is effective once properly signed. However, before you can buy or sell real estate in most states under the power you must register it with the Office of Land Titles/Land Registry.

The Department of Land Administration charges for this privilege. People therefore often only register the power when they are going to deal with real estate. You can register the power at any time. However, after 3 months your attorney has to swear that the attorney remains unrevoked.

Examples of Enduring Power of Attorney

Sally and John have been married for ten years. They have two children, jointly held bank accounts including a savings account, utilities, insurance and a property. Sadly, Sally was hit by a car when walking to the shops and she suffered an ongoing loss of decision-making capacity which resulted in large medical bills. Sally and John’s home was no longer suitable for Sally’s accessibility needs. The result was that even though Sally and John were married their house could not be sold unless John was granted the role of formal decision maker through a court hearing. If Sally had made an Enduring Power of Attorney when she had capacity, John would not have had the extra stress at a time when he needed to focus on her care and the care of their family.

Michael was 22 and had a well-paid job in the mining sector. He had a mortgage and was also paying off a car. Michael had an accident at work that left him in a coma for almost four months. Luckily he regained consciousness and capacity to manage his affairs. During the time Michael was incapacitated it was very difficult for his family to pay his bills, make mortgage payments and manage his finances because the bank would not let his parents access his accounts without a valid Enduring Power of Attorney or Court order. Even though he was young, if Michael had an Enduring POA, which appointed his parents they would have been able to manage his financial affairs on his behalf while he was incapacitated.

Problems with Power of Attorney

Attorneys Can Mismanage Finances

There have been numerous instances of family or friends mismanaging their role as Attorney.

This can include selling a person’s assets and retaining the money for themselves and/or transferring ownership of assets into their names.

When investigated, common responses are ‘Mum, wanted us to have the money’; ‘Dad doesn’t need the money and we do’ and ‘The money is not doing them any good in the nursing home and we have a mortgage to pay’.

Experience shows that Courts of Law generally do not accept these types of reasons. This may result in legal action against the Attorney to recoup money on behalf of the person with incapacity.

Making an Enduring Power of Attorney is a serious matter. You should carefully consider who you appoint as your Attorney/s for health and personal matters and for financial matters.

If I lose capacity, will my spouse be able to look after me so I don’t need an Enduring Power of Attorney?

Before a person loses decision-making capacity, it is wise if they outline who they would like to be their Attorney for health, personal matters and financial matters. An attorney undertakes specific duties within a POA. You should consider if your spouse would be able to undertake these requirements. You should consider a substitute decision-maker in case your spouse in not able to perform this role.

If there is conflict in your family it is also wise to specify your wishes so there can be no misunderstanding.

If I don’t have an Enduring Power of Attorney and I lose capacity. What happens?

A Court may be required to make a decision about who will be appointed to manage your affairs. The result of the court hearing may be that The Public Trustee is appointed to manage your financial affairs or it could be a member/s of your family.

For example, if you suffered a stroke or fell into a coma your family would have to make an application to a Court of Law to award them an enduring power of attorney over your affairs. That POA could be awarded to a family member that you don’t like or don’t trust with your affairs.

What can happen if you don’t have an accountability clause in your Enduring Power of Attorney?

Joan made an Enduring POA herself by filling out the relevant form and having it adequately witnessed. She made her eldest daughter her Attorney as her son was living overseas. Joan later became incapable of decision-making.

Unknown to Joan, her eldest daughter was syphoning off money for years to pay for her children’s school fees. If Joan had included an accountability clause, her son overseas would have had authority to be informed of the state of the financial affairs. If Joan’s son did receive an accounting in accordance with the accountability clause, he would have been able to raise this matter with the Court

What can happen if you don’t have a consultation clause in your Enduring Power of Attorney?

Paul made an Enduring Power of Attorney at the same time as he made his Will. He made Valerie, his de-facto partner of three years his Attorney for health, personal and financial matters. Paul thought that as they were living together it was the right thing to do.

When Paul had a stroke and lost capacity for decision making, Valerie decided to move them from where her and Paul were living to the coast. Once there, she arranged for Paul’s care in a local nursing home.

Paul’s adult children with whom he had a close and happy relationship were adamant that he would not have wanted to move to the coast, let alone move into a nursing home. They were very distressed claiming that a way should have been found for Paul to live in his own home or at least in the same town as his family and grandchildren. If Paul had included a consultation clause in his Enduring Power of Attorney or appointed more than one Attorney to safeguard his best interests, his children would have had some input or a clear say in his future life decisions.

What if I don’t have anyone suitable to appoint as my Enduring Power of Attorney?

If you don’t have suitable family members or friend to appoint as your Enduring POA you can appoint The Public Trustee or a lawyer to manage your financial affairs and the Adult Guardian to manage your personal and health matters.

However, it is recommended to avoid the appointment of the Public Trustee or a lawyer as your Attorney. The legal fees are very expensive. Also, your family has to constantly make requests to the Public Trustee or lawyer to get anything done. The Public Trustee or lawyer may refuse to carry out the requests of the family and you would have to go to Court to try to revoke the power of attorney.

How Do I Revoke a Power of Attorney?

The easiest way to revoke any Power of Attorney is to tear up all copies. Does your lawyer holds one copy of the POA in your safe custody packet? If so, send a signed letter to your lawyer stating that the Power of Attorney is revoked and is to be destroyed. Your lawyer will then tear up the Power of Attorney they hold for you (or post it back to you).

It is prudent to send a signed letter to your Attorney telling the Attorney that the POA is revoked and ask for all copies to be posted back to you. Provided your Attorney received the letter then it would be illegal for your Attorney to keep using the POA. Criminal sanctions can even apply.

Also, it is recommended to write to all banks and other people that have been presented with the POA. Keep copies of all such letters.

If you are concerned that the POA may still be used by the Attorney then you should send a letter to the Police and the Guardianship & Administration Authority in your particular state/country.

Sometimes the POA is registered at your local Land Registry/Titles Office. If any of your POAs are so registered then attend at one of Land Titles offices with a copy of the POA. You will write on the POA “Revoked” on each page. Sign each page. A witness signs and dates the document (include the witness’s address and job). Lodge this with the Land Registry/Titles Office. Lodge the “Revoked” POA even if the lawyer has not yet lodged the original POA at the local Land Titles Office. Why would you do this? Your Attorney may still try and lodge the POA at the local Land Titles Office at a later time.