A Power of Attorney (POA) is a legal document that grants a nominated person the legal authority to act on behalf of another person’s affairs. These may relate to personal, lifestyle, financial or medical affairs. A person who is granted POA is known as an agent, while the person nominating is known as the principal.
In Australia, the two most common POA’s are General and Enduring.
Each state and territory has their own variations regarding the rules of being a power of attorney. For this reason, you should be familiar with the rules as they apply to your region.
Purpose of a general power of Attorney
A general POA is often appointed to make financial decisions on behalf of another person. This may occur if the principal is unavailable or they need help with their financial or property affairs. This agreement can only last for a fixed period of time. For example, if a principal needs an agent to run their business for a few months while overseas.
It is important to note. A general POA is no longer valid if the principal loses the full legal capacity to make decisions. For example, the principal suffers from a serious mental or physical disability, which permanently affects their ability to make rational and sensible decisions
Purpose of an enduring power of attorney
An enduring POA has the power to make certain decisions on behalf of the principal when the principal does not have the mental capacity to attend to their own affairs.
Agents are only allowed to make decisions related to financial matters. However, in Queensland, Victoria and the Australian Capital Territory, a principal may give an agent the authority to make decisions around their health, lifestyle and personal wellbeing too.
If a principal lives outside of those states and territories, they will need to apply for a separate medical or personal power of attorney.
How to nominate a power of attorney
Your nominated person should be someone you trust to stand in your place and make the same decisions you would make if you had the capacity. The person can be anyone you wish be it a close family member, friend or partner.
You should also make sure the nominated person has the capacity to fulfil the role of a POA. In some cases, it may help if the person has a background in the kind of tasks you need completed (i.e. financial or medical background). Of course, this is not mandatory.
How can a lawyer help you appoint a power of attorney?
Appointing a POA is a major life decision. You want to be sure the person you choose will act in your best interests. And you want to be sure they can handle the role with total confidence.
Technically, you can complete the necessary forms yourself to appoint a POA. However, there are many advantages to enlisting the help of a lawyer.
Firstly, they will take into account your unique circumstances. They will take the time to explain the different options to you, and what you can expect based on the kind of powers you wish to grant. Essentially, you will have a clear understanding of what an agent can and cannot do under the agreement.
Secondly, a lawyer will make sure the use of vocabulary in the agreement is clear and easy to follow. This way, your friends and family will not dispute the wishes of the agreement, as the conditions will be crystal-clear.
Finally, they can properly witness the signing of the documents for you.
For expert legal advice and support on appointing a power of attorney, contact McDonnell Schroder today.