What is an Enduring Power of Attorney?
Power of Attorney is the legal power to make financial decisions on someone else’s behalf. ‘Enduring’ simply means that the power continues even if the person giving it loses the capacity to make decisions.
A Power of Attorney is a convenient method of allowing someone to handle your affairs if you go overseas, take an extended holiday, suffer from poor health, have an accident or reach a stage in your life when you need greater assistance.
An attorney under an Enduring Power of Attorney cannot make decisions about your lifestyle or health; these decisions can only be made by a guardian (whether an enduring guardian appointed by you or a guardian appointed by the New South Wales Civil and Administrative Tribunal (NCAT) or the Supreme Court).
An Appointment of Enduring Guardian appoints someone to make medical and lifestyle decisions on your behalf in the event that you lose your mental capacity.
A Power of Attorney and Appointment of Enduring Guardian are just as important as a Will. Whilst a Will operates on your death, a Power of Attorney and Enduring Guardian operate during your lifetime.
Why give someone Enduring Power of Attorney and Enduring Guardian?
There are some circumstances in which you may be unable to make decisions about matters that concern you. For example, you may be overseas, or you may be too ill.
If you give someone a general Power of Attorney, for instance to sign documents for you in your absence, that power will come to an immediate end if for some reason you lose your capacity to make decisions. This could be very awkward if your attorney is in the process of conducting business affairs for you.
Giving someone Enduring power means that he/she is able to continue to act for you if you lose capacity to act for yourself. For example, if you develop a medical condition (such Alzheimer’s or dementia), suffer a head injury in a car accident or have a stroke which results in you being left in a vegetative state, you may still live for quite a long time but be completely unable to handle your own financial affairs.
If you required medical or dental treatment (which usually requires a consent form to be signed) this could not be undertaken if you have lost your mental capacity. Your appointed guardian can do this for you. Similarly, if you need to be moved into a nursing home or similar care facility because your condition has deteriorated, your guardian can make the necessary arrangements on your behalf with the health authority.
You should safeguard your affairs by making an Enduring Power of Attorney and Appointment of Enduring Guardian now, whilst you are in good health and able to decide who you wish to be legally appointed to act on your behalf.
What types of decisions can an attorney/guardian make?
An example of a financial matter that can be made by your attorney is deciding how your income should be invested, buying/selling property or dealing with government departments such as Centrelink.
Examples of health and lifestyle decisions are decisions about where and with whom you live, whether you work or undertake education or training, whether you apply for a licence or permit, day-to-day issues like diet and dress, and whether to consent, refuse to consent or withdraw consent to particular types of health care for you (such as an operation).
Whom should I appoint as my attorney/guardian?
Your appointed attorney must be over the age of 18 years and must not be bankrupt. Your appointed guardian must be over the age of 18 years, must not be your health care provider (ie your doctor) or a paid carer (receiving a carer’s pension does not preclude a person from being your guardian). Your attorney/guardian could be a close family member (such as a spouse or child), a trusted friend or professional advisor (such as an accountant or lawyer).
You should ask the person you want to appoint if they will agree to be your attorney/guardian. You should only appoint a person you can trust to look after your affairs. You may want to appoint more than one attorney/guardian.
Most couples appoint each other as their sole attorney and guardian and this is usually fine. However, there can be some difficulties when couples have children from previous marriages. Sometimes it might be wise to appoint one of your own children or an independent person as a co-attorney/guardian with your spouse.
Many parents appoint the eldest child or one of their children to be their attorney/guardian in the event that something happens to one or both of them. This can be fraught with difficulty. If you appoint a single person, no matter how trustworthy they are, this can place a lot of pressure on them and leaves the door open for abuse or just bad decisions to be made. You should consider always appointing 2 or 3 children jointly as a simple majority to make sure that your affairs are handled correctly. Many parents have difficulty in appointing their children either singularly or together because they do not trust them or their children do not get on. In these circumstances, it may be appropriate to consider appointing an independent person to handle your affairs, especially for financial matters (e.g. your solicitor or accountant). Another variation of this is to appoint a professional person to act jointly with 1 or 2 of your children. There are fees payable to a professional person if you appoint them to conduct this role but in many cases these fees are quite modest and are worth every penny if this guarantees that your affairs will be handled correctly when you are unable to make your own decisions.
When does the attorney’s power begin?
You may nominate when your attorney’s power is to begin. If you do not name a date or an occasion, it begins immediately. On the other hand, if you lose the capacity to make such decisions before the date or occasion you name, the power begins at that point. Even if you give your attorney power immediately, you may also continue to make decisions yourself while you are able to do so.
When does the guardian’s power begin?
Your enduring guardian’s power to make decisions does not begin until (if ever) you have lost capacity.
What happens if you do not have an attorney/guardian to act for you?
Depending on your circumstances, the problems could be far-reaching if you lose capacity without appointing an attorney/guardian. There is a possibility that your affairs may be handled by a government department, for a fee.
In some circumstances financial matters may be dealt with on an informal basis. However if you do not have an Enduring Power of Attorney and formal authority is needed for a transaction, or if disagreements between family members arise, the Guardianship Tribunal decides the appointment of an administrator. This can be a lengthy and frustrating experience at a time when stress levels are very high. By making an Enduring Power of Attorney and Appointment of Enduring Guardian you choose the trusted person to administer your financial, personal and health affairs for you.
What is ‘capacity’?
To make an enduring power of attorney and appointment of enduring guardian you must be an adult capable of making your own personal and financial decisions. Having the capacity to make decisions means that you can:
- understand the nature and effect of a decision;
- freely and voluntarily make those decisions; and
- communicate the decisions in some way.
You also need to understand the nature and effect of an enduring power of attorney and appointment of enduring guardian including the contents of the document, consequences of preparing the document and when the power begins.
For enquiries regarding NSW Enduring Powers of Attorney and Appointments of Enduring Guardian, please contact us on (07) 5536 9777 or by email [email protected].