Selecting a person to act in your place
The appointment of your attorney enables that person to act in your place, and do the things you would normally do yourself. Such as signing documents, paying the bills and doing the banking. The person you choose, your Attorney, has the right to stand in your shoes when you wish them to look after your affairs. In reality they can enter into agreements in your name and on your behalf.
Therefore as a result of the power of the appointment it is critical that you select the right person to act in that capacity. The person does not have to be a lawyer. In fact it is important for the person to know you well and for you to respect them. It is often a trusted family member but whoever it is must be over 18.
The difference between a general and an enduring power of attorney
Not all powers of attorney are the same.
A general power of attorney is a legal document that gives the attorney the authority to make decisions about financial and legal matters on behalf of the person who appoints them. This power lasts only for as long as the person who appoints them has mental capacity. The general power ceases to operate if the donor loses capacity to make decisions. A general power of attorney is often used as a tool of convenience. For example, a person might appoint a general power of attorney to look after their financial and legal affairs in Australia while they travel overseas.
An enduring power of attorney is similar to a general power of attorney except that the powers continue, or endure, in the event the donor loses mental capacity.
An Enduring Power of Attorney, unlike the General Power of Attorney, must be explained to you by a prescribed witness, that is, a lawyer. An Enduring Power of Attorney becomes void when you die.
What happens if you lose capacity without having a Power of Attorney?
If you do not have an Enduring Power of Attorney and develop a mental incapacity you are therefore unable to manage your financial affairs. It is too late then to have a lawyer prepare such a document as you do not have capacity to sign it. The problem is then that no person automatically has the right to manage your assets. Not even if they are your husband or wife.
This therefore has a colossal effect on all the financial decision making thereafter with your bank accounts, your jointly owned home, shares or other jointly owned assets or liabilities.
To have decisions made in these circumstances would then involve an application to the NSW Civil and Administrative Tribunal (formerly the Guardianship Tribunal).
Imagine your spouse needing to consult with a government department to deal with your ongoing financial decision making remembering that this would continue until your death.
If you need any assistance contact one of our lawyers at [email protected] or call +61 2 9212 2422 for a no-obligation discussion and for expert legal advice.