What are Powers of Attorney?

Date: Jun 16, 2014
Document Type: Article
Should I have a Power of Attorney?

It is never pleasant to contemplate circumstances in which you are unable to control your personal and financial affairs. However, the appointment of a trusted person to manage your legal and financial affairs on your behalf if you are temporarily unavailable or permanently incapacitated can ensure your financial interests and those of your loved ones are protected. Such an appointment is known as a ‘power of attorney’. 

What is a Power of Attorney?

A power of attorney is a legal document where you, as the ‘principal’, appoint another person your attorney to control and make decisions on your behalf regarding your legal and financial activities which could include dealing with your money, bank accounts, real estate, shares or other assets. If you want your attorney to deal with real estate, the power of attorney must be registered with the Land and Property Information Office.

A power of attorney is important for situations where you are unable to look after such matters because you are, for example, in hospital, overseas or otherwise unable to attend to your business. Most institutions such as banks, government offices or real estate agencies will not allow someone to carry out directions on your behalf without a power of attorney. By granting a power of attorney, you are legally authorising someone to act on your behalf.

There are two main forms of power of attorneys – General and Enduring. Deciding which type is best for you will depend on your circumstances and what you require of an attorney. Due to recent changes, there is now a specific form for each power of attorney. For more information regarding the changes to forms see – ‘Changes to Forms of Powers of Attorneys’.

General Power of Attorney

A general power of attorney is more appropriate for short term appointments or one-off transactions. For example, you might be out of town or confined to hospital due to an illness and require someone to affect a business deal for you. Crucially, this power of attorney will be extinguished if you lose your mental capacity.

Enduring Power of Attorney

An enduring power of attorney on the other hand continues to operate after you have lost mental capacity. This type of appointment is preferable if you are considering who will manage your affairs in the long term if you permanently lose mental capacity due to an accident or illness. This is particularly relevant for the elderly who may be concerned about their deteriorating mental faculties.

It is important to create powers of attorney before you need them. Once you lose mental capacity, you will be unable to appoint an attorney, which means you will not be able to choose the person you trust to manage your affairs. It is vital not to wait until it’s too late.


What can’t a power of attorney do?

An attorney’s powers are confined to your legal and financial affairs. They do not have the power to make personal decisions such as those regarding your health or medical treatment. If you wish to appoint someone to make such decisions you should appoint an ‘enduring guardian’.  

In addition, you can provide specific direction and impose limitations in your power of attorney document, providing what they can and cannot do.

Who should I appoint as my attorney?

Appointing a power of attorney does not mean you lose your right to deal with your property and manage your affairs whilst you still have capacity to do so. However it confers a significant power on the person you appoint. Any transactions made by your attorney under this power will be binding upon you.

Therefore, it is imperative to choose someone that you trust to look after your affairs. This could be a close family member or friend or even a professional body such as the NSW Trustee & Guardian, a trustee company or a solicitor.

If you cannot trust your chosen attorney to always act in your best interests, it’s probably best to choose someone else.

How do I get rid of my attorney?

If you decide you no longer want someone to act as your attorney, you must expressly revoke the appointment whilst you still have mental capacity. It is not enough simply to appoint someone else. Whilst you can write a letter expressing your intention to cancel the power, we recommend you complete a Revocation of Power of Attorney form to make your intention completely clear. Either way, you must ensure the attorney is aware you have cancelled their appointment.

If you have any questions relating to powers of attorneys please feel free to contact us.

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