A power of attorney is a formal instrument by which one person empowers another person to act in their stead for certain legal and financial purposes (e.g. dealing with bank accounts, transferring money, paying bills, dealing with investments, or buying and selling real estate) when they can’t do so themselves.
For example, you might be unavailable to make financial decisions (e.g. because you are overseas or spending time in hospital). Or you might be unable to manage your finances due to serious illness or accident, or loss of mental capacity.
A power of attorney will give that person the authority to act on your behalf. You can appoint an attorney for a limited period, or an indefinite period. The latter applies until you die or revoke it.
A ‘general’ power of attorney ceases to be valid when the person who donated the power loses mental capacity.
An ‘enduring’ power of attorney is required should you suffer loss of mental capacity
For a power of attorney to remain valid after you lose mental capacity, you must make an ‘enduring’ power of attorney.
An enduring power of attorney is an important consideration for everyone, not just people who are older or with a known illness that may affect mental capacity.
For example, if you have an accident or a sudden illness that causes you to lose mental capacity, nobody will be able to access your assets, such as your bank account or superannuation, unless you have an enduring power of attorney.
And you might need that money to pay for your medical treatment.
Or your investments might require an important action to be taken, but you might not be in a position to do so.
A family member or a friend could apply to be appointed as your financial manager or administrator, either through a Civil and Administrative Tribunal or the Supreme Court (depending on the State in which you live), but this could take considerable time.
It is therefore in your best interests to have already given someone an enduring power of attorney so they could take the appropriate actions in a timely manner.
Who can you appoint as your attorney
Your attorney has full authority to deal with your legal and financial affairs. You should appoint someone you trust to act in your best interests. Most people choose either a family member or close friend or a fiduciary company that can act as your attorney.
Disclaimer: This article is not legal advice and should not be relied on as such. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. You should obtain financial advice relevant to your circumstances before making investment decisions. Where a particular financial product is mentioned you should consider the Product Disclosure Statement before making any decisions in relation to the product. Whilst every care has been taken in the preparation of this information, Australian Unity Personal Financial Services Ltd does not guarantee the accuracy or completeness of the information. Australian Unity Personal Financial Services Ltd does not guarantee any particular outcome or future performance. Australian Unity Personal Financial Services Ltd is a registered tax (financial) adviser. Any views expressed are those of the author and do not represent the views of Australian Unity Personal Financial Services Ltd. If you intend to rely on any tax advice in this document you should seek advice from a tax professional. Australian Unity Personal Financial Services Ltd ABN 26 098 725 145, AFSL & Australian Credit Licence No. 234459, 114 Albert Road, South Melbourne, VIC 3205. This document produced in October 2015. © Copyright 2015