There may come a time when it is necessary to appoint someone to manage your financial or legal affairs. Taking the time to make a Power of Attorney means your financial and legal affairs can be looked after by someone you know, and trust, should you be unable to make those decisions for yourself.
Recently a client came to see us after her mother was involved in a motor vehicle accident. The client needed to pay her mother’s bills and redirect her mail but was unable to do so as her mum had not completed a Power of Attorney.
What is a Power of Attorney?
You may give another person a ‘Power of Attorney’ that allows that person to act on your behalf. The person appointed as your attorney can do anything you can do lawfully.
For example, your attorney can transact on your behalf, open bank accounts and buy or sell assets.
General Power of Attorney
A general Power of Attorney can be made for a specified amount of time or for a specific purpose. Commonly, a General Power of Attorney is used where a person lives overseas and wants to appoint someone to handle their financial or legal affairs in Australia.
A General Power of Attorney will cease when you die, or if you become legal incapacitated. If you wish to appoint someone as your attorney in case you may become legally incapacitated, you will need to make an ‘enduring power of attorney’.
Enduring Power of Attorney
An Enduring Power of Attorney is a Power of Attorney that continues to operate even though you may later become legally incapacitated, for example, if you become of unsound mind or are unable to communicate in any way.
The vast majority of powers of attorney that we prepare are Enduring Powers of Attorney that can only be used in the event of someone’s legal incapacity.
You are not able to make a Power of Attorney after you become legally incapacitated, you must be able to understand the effect and the nature of the document at the time of signing. It is therefore important to have an Enduring Power of Attorney in place in case you were to lose capacity.
I have a Will, why do I need both?
It is important to have both an Enduring Power of Attorney and a Will.
Your Will has legal force after your death and deals with your estate, whilst a Power of Attorney deals with your is financial affairs while you are alive. When you die, your Power of Attorney (whether general or enduring) ceases automatically.
Make an appointment to speak to an experienced Wills & Estate Lawyer today who can help set you on the right path.