Enduring power of attorney

Published Wednesday, 4 April 2001 by

Power of Attorney A Power of Attorney is a legal document that provides authority to a person (attorney) to act on behalf of another person (donor). That authority can be as broad as to give the attorney control of all your business affairs by authorising him or her to do anything on your behalf, or be restricted to a single transaction or time frame such as selling a specified asset or operating a bank account while away on holidays. Authority under a general Power of Attorney ceases immediately the donor becomes mentally incapable of managing their own affairs or giving instruction. An Enduring Power of Attorney continues to operate even after the donor has become mentally incapacitated. For an Enduring Power of Attorney to have effect the original document must be witnessed in the relevant prescribed form. The requirements in each state may differ and it is essential for an Enduring Power of Attorney to have effect, it meet the relevant state legislation. Who to Appoint Enduring Powers of Attorney provide many benefits in managing your affairs. However, care is needed in appointing your attorney as there have been instances of abuse. Make sure you understand the implications of what you are doing and ensure your Enduring Power of Attorney has been prepared correctly. As your attorney will be able to do anything you can do in relation to dealing with your assets and financial affairs it is important to appoint a person who you trust implicitly. If you cannot appoint someone you consider trustworthy you can appoint a professional trustee company to manage your affairs but be aware of the costs that may apply. You can appoint more than one attorney but be sure they can work together as they will be making financial decisions on your behalf. You will need to obtain legal advice on whether your nominated attorneys should be appointed jointly or severally, that is, whether you wish them to make decisions on your behalf together or individually. Advantages
  • Ensures your affairs can continue to be managed in the event of incapacity
  • Can be established to come into effect on the occurance of a specified event (illness or incapacity)
  • You can appoint a person to make decisions about medical treatment on your behalf
  • Easy to revoke (cancel) and to appoint another attorney
  • Does not interfere with your rights to make your own decisions
Disadvantages
  • The vesting in another person your total trust in the administration of your affairs including management of your investments
  • It may be difficult to prove your attorney has acted dishonestly or improperly so choose your attorney carefully
  • If cancelling the Power of Attorney you will need to inform all organisations (financial institutions or government departments) that have dealt with your attorney otherwise they may continue to allow the attorney to act on your behalf.
Responsibilities of the Nominated Attorney The person who holds your Power of Attorney has a legal obligation to act in your best interests at all times. Furthermore, they must:
  • maintain proper records of any dealing on your behalf;
  • keep their money and property separate from yours; and
  • avoid any conflicts between their interests and yours.
Costs The cost of preparing an Enduring Power of Attorney will differ depending on who you can use to prepare the document. You may chose to prepare your own at no cost to you. If preparing your own Enduring Power of Attorney be sure the document is prepared and signed in accordance with any specific state legislative requirements, otherwise your intentions of establishing an Enduring Power of Attorney may be of no avail. Legal Advice The information contained in this leaflet is of a general nature only. While it is possible to draft your own Enduring Power of Attorney, legal advice should be sought if you have any doubts or if your situation is considered complex. Where to obtain legal assistance
  • Community Legal Centres
  • Practicing Solicitors
  • Public Trustee
  • Chamber Magistrates
Glossary Attorney - the person appointed or empowered to transact any business on your behalf . Donee - the person appointed as your attorney. Donor - the person who issued the Power of Attorney. The National Information Centre on Retirement Investments Inc (NICRI) is a free, independent, confidential service that aims to improve the quality of investment information provided to individuals who are investing for retirement or facing redundancy. NICRI works at arms length from both government and the finance industry to provide a completely unbiased source of information to the public. Funding for this consumer service is provided by the Department of Family & Community Services. August 2001