Powers Of Attorney

What is a Power of Attorney?

A Power of Attorney is a legal document that you sign which gives someone else the right to do things in your name. Usually a Power of Attorney is made by a person (called the ‘principal’) that allows another person (called the ‘attorney’) to deal with the principal’s money and assets. These assets may include the principal’s bank accounts, money, shares, real estate and other types of assets.

No one has the right to act for you unless you sign a Power of Attorney allowing them to act for you as your attorney.

There are two types of powers of attorney:

		A General Power of Attorney; and
		An Enduring Power of Attorney.

What does a Power of Attorney do?

The principal often gives the attorney the power to:

		Spend or otherwise manage the principal’s money, including bank accounts;   Buy or sell shares for the principal; and/or   Buy, sell, lease or mortgage the principal’s house or other real estate.

Essentially, depending on what limits you wish to impose, your attorney can do all the things you can do with your money and assets.

You should note that a Power of Attorney does not permit the attorney to make medical or personal decisions for the principal. If you want another person to make a medical or personal decision for you then you should appoint an ‘Enduring Guardian’. The appointing of an Enduring Guardian requires the completion of a separate form called the “Enduring Guardian” form.

What is a General Power of Attorney?

A General Power of Attorney only lasts until the principal loses ‘mental capacity’. This means that when the principal cannot manage their affairs or cannot understand a document that they are signing, the power given to the attorney will lapse.

A General Power of Attorney is useful when, for instance, you are going overseas for a short period and need someone to look after your affairs whilst you are away. Other examples for a General Power of Attorney include:

		If you become ill and need someone to take care of your finances whilst you are in hospital;
		If, for other reasons, you cannot get to your bank, real estate agent or other agencies and need someone to do it for you; or
		If you need someone to be able to sign documents on your behalf that deal with buying, selling or dealing with real estate.

What is an Enduring Power of Attorney?

An Enduring Power of Attorney is one that continues even after the principal has lost mental capacity. The formalities for an Enduring Power of Attorney differ from those for a General Power of Attorney.

You should talk to your lawyer about your particular circumstances when considering making a Power of Attorney.

An Enduring Power of Attorney is useful where you become unable to look after your affairs at some point in the future, perhaps because of physical or mental illness. An Enduring Power of Attorney allows you to prepare for that prospect.

An Enduring Power of Attorney lasts until:

		You die;
		You go bankrupt;
		You cancel the arrangement; or
		The government appoints a guardian for you.

Do I need to see a lawyer to make a Power of Attorney?

It is better to see a lawyer if you need someone to explain the powers to be given to your attorney, or if you have particular questions. Ask your lawyer about the cost of preparing a Power of Attorney. If you want to make an Enduring Power of Attorney, you will need to have it certified by a solicitor or other qualified person.

What about my rights?

Just because you appoint an attorney doesn’t mean that you lose your right to operate your bank account or deal with your real estate or affect any other right you have over your assets. You will be able to manage your assets while you still can think properly and understand what is going on around you.

When should I make a Power of Attorney?

You should make a Power of Attorney when you are well and before you need someone to look after things for you. This is particularly so with an Enduring Power of Attorney. If you have lost mental capacity you cannot make a Power of Attorney because you will not be able to understand what you are signing.

When does a Power of Attorney start?

A Power of Attorney usually starts as soon as it is signed and given to the attorney. However, you can state on the Power of Attorney form when you want it to commence.

An Enduring Power of Attorney starts as soon as you hand or post it to your attorney. You may specify that your attorney should not use the power until you say so, or only if you stop being able to think properly or to understand what is happening around you.

Who should I choose as my attorney?

Any person over 18 years can act as your attorney. You need to choose someone who you can trust and who is responsible – someone who will do what you would want. Of course you should make sure that the person you want to appoint is willing and able to do so. Discuss the matter with the person you wish to appoint so that you can be sure that they will exercise their powers appropriately.

If you do not wish to appoint a friend or family member you can appoint the Public Trustee, or a trustee company or lawyer. However, you should check with each to see what fees they will charge for acting as your attorney. See the Public Trustee at www.pt.nsw.gov.au

What if I want to appoint more than one attorney?

If you want to appoint more than one attorney you must indicate whether you wish them to act jointly (in which case they must all agree before acting for you), or jointly and severally (where one may act independently of the others).

What are my attorney’s obligations to me?

Your attorney is generally obliged to act in your best interests. They must act in good faith. They must inform you about any conflict between your interests and their own interests. You should go through the Power of Attorney form of appointment with your lawyer so that you can ask any questions that might be relevant to your particular circumstances. Most importantly an attorney must:

		Keep their own money and assets separately from yours; and
		Keep proper records and accounts of how they handle your money and assets.

If your attorney fails to carry out their obligations they may have to compensate you.

What if I change my mind about my attorney?

You can revoke your Power of Attorney at any time, as long as you can still think properly and you understand what it means to revoke the power of attorney. You must give your attorney a letter or form revoking their appointment to ensure they know that their appointment is revoked.

By signing a Power of Attorney, you are giving someone else the right to deal with your finances. Therefore, it is very important that you get advice and carefully consider the possible consequences of giving such an important power to another person or persons.

Useful Contacts

		To locate your local Community Legal Centre - www.nswclc.org.au
		LawAccess – www.lawaccess.nsw.gov.au
		Law Society of NSW – www.lawsociety.com.au

Acknowledgements: The Law Handbook, 9th edition (Redfern Legal Centre Publishing); Powers of Attorney in NSW (Information Kit) February 2004; Department of Lands website; Australian Federation of AIDS Organisations (AFAO) pamphlet.

Disclaimer: The information contained in this fact sheet is only intended as a guide to the law and should not be used as a substitute for legal advice. If you have any further questions we strongly suggest you seek legal advice.

Note: This information applies to people who live in, or are affected by, the law as it applies in the State of New South Wales, Australia.

The information contained in this factsheet is current as at 13th July 2005.