Who will look after your finances if you have an accident or develop dementia and can no longer manage your affairs? Who do you trust to make financial decisions for you?

We all want to be financially comfortable in retirement. Yet many of us pay scant attention to planning for our later years. Retirement may seem a long way off or it may all seem too hard so we ignore the problem. But its never too late to take the time to start planning.

With people living longer, planning for a situation where you are unable to manage your finances is becoming increasingly important. That’s why you should consider appointing an enduring attorney.

Power of Attorney

What is a Power of Attorney?

A Power of Attorney is a legal document in which you appoint a person you trust to act on your behalf to do certain financial things.

Usually your attorney can:

    • open and close bank accounts,
    • withdraw funds from and deposit funds to your account,
    • pay all of your bills for you from your account,
    • insure your personal assets,
    • deal with Centrelink on your behalf, and
    • sell, mortgage or lease your house.

Who should I appoint?

You should appoint someone that you trust totally as your attorney is really a trustee for your finances.

What are the types of Powers of Attorney

General Power of Attorney

This type only operates until you pass away, cancel the appointment or if you suffer loss of capacity. A general Power of Attorney is generally taken out to deal with specific situations rather than in case your develop dementia.

Enduring Power of Attorney

This type continues to operate if you suffer loss of capacity.

Here we discuss only this type as the other type is much less common.

Advantages of a Power of Attorney

If you develop dementia without having appointed an enduring attorney, someone will have to apply to the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) for a Financial Management Order (FMO). The making of a FMO means that all or part of your financial affairs will be managed under the NSW Trustee and Guardian Act.

What if there are disputes about financial decisions?

If there is no power of attorney and there are disagreements then a family member or someone interested in your well being may seek a FMO from NCAT.

When determining whether to make a FMO, NCAT must consider your capacity to manage your own affairs and be satisfied that:

  1. you are not capable of managing your affairs; and
  2. there is a need for another person to manage your affairs; and
  3. it is in your best interests that the order be made.

If NCAT does not make a FMO it may appoint:

  • a suitable person (who may not be the person you would have chosen); or
  • the NSW Trustee & Guardian

to manage your financial affairs.

How many Attorneys can I appoint?

As many as you wish. If you appoint more than one, they are appointed to act either:

  • jointly,
  • severally, or
  • jointly and severally.

Joint attorneys must all act together . A joint appointment will terminate if:

  • the appointment of one attorney is cancelled; or
  • one attorney:-
    • disclaims,
    • dies,
    • becomes bankrupt; or
    • becomes physically or mentally incapable of acting as an attorney.

An enduring power of attorney can provide that if the appointment of one of the attorneys ends the others can continue to act.

Joint and several attorneys can act together or separately. The power of attorney is not terminated if one of the attorneys is temporarily incapable of acting.

When does the Power of Attorney start to operate?

A power of attorney starts operating only if the circumstances you specify in the power of attorney arise.

It can start operating:

  1. when your attorney accepts their appointment; or
  2. when a doctor writes that you require assistance; or
  3. when your attorney considers you require assistance; or
  4. in any other circumstances set out by you.

What powers can my Attorney exercise?

The Powers of Attorney Act sets out your attorney’s powers. They have the power to act:-

  • when authorised by you and accepted by your attorney; or
  • when you lose your mental capacity; or
  • at some other time as stated by you in your Power of Attorney.

Generally your attorney is authorised to do anything you are lawfully authorised to do.

You may restrict the powers you give your attorney.

The powers and responsibilities you normally give your attorney include:

  • protecting your interests by keeping their assets separate from yours;
  • maintaining accounting records of their dealings with your assets;
  • avoiding any conflict between their duty to you and their own interests;
  • obeying your instructions whilst you have capacity; and
  • not making gifts or providing benefits to themselves or others unless specifically authorised by your Power of Attorney.

You may authorise your attorney to use funds to

  • give gifts (which must be reasonable given the amount of your assets) seasonally or occasionally to close friends or relatives, or
  • make donations that you would normally make; or
  • give themselves or others benefits for reasonable living and medical expenses.

Your attorney may not make decisions about your personal affairs, which is the responsibility of an enduring guardian.

What decisions can my attorney NOT make?

Your attorney can not:

    • Make a will for you;
    • vote for you;
    • consent to your marriage;
    • manage your personal and lifestyle affairs; or
    • consent to medical or dental treatment on you.

Can I cancel a Power of Attorney?

Yes, if the cancellation is in writing and you have the legal capacity to cancel it.

You must advise your attorney in writing that the power of attorney has been cancelled. If your power of attorney has been registered with New South Wales Land Registry Services (NSWLRS) you must register a form with NSWLRS revoking it.

Do I need to register my Power of Attorney?

You need only register a power of attorney at NSWLRS if it is to be used to sign a legal document to sell, lease or mortgage real estate.

Relationship between Power of Attorney and Appointment of Enduring Guardian

A power of attorney relates to your financial affairs rather than to your person.

You may appoint someone to be your enduring guardian in the event that you suffer from a disability and are incapable of managing your person. Your guardian can:

  • consent to medical and dental treatment,
  • decide where you live, and
  • decide what personal and health services you receive.

You can include in such an appointment directions as to end of life matters.

An appointment of enduring guardian commences operating only after you suffer loss of capacity (e.g. if you suffer from dementia or are in a coma).

Appointing an attorney minimises your family or carer’s need to apply for a FMO. However, the existence of an attorney would not prevent a person genuinely concerned for your financial welfare from applying for a FMO.

Although your attorney and your guardian carry out different functions and deal with different aspects of your welfare, their relationship is intimately linked because lifestyle decisions and financial decisions affect each other. If you are contemplating appointing different people as your attorney and guardian, you should consider their compatibility before making an appointment.

The Next Step

The appointment of an attorney requires your lawyer to prepare a legal document signed by you and the person/s you wish to appoint as your attorney. Your signature must be witnessed by a prescribed witness such as a lawyer, a Registrar of the Local Court or a Licensed Conveyancer. Justices of the Peace are not prescribed witnesses.

Contact us to advise you and professionally draft your Power of Attorney.  

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