A power of attorney enables someone to act on another person’s behalf, particularly regarding legal and financial decisions. This may be to buy and sell shares, buy, sell and manage real estate, operate bank accounts and pay bills.
Appointing someone with the authority to act on your behalf is a serious decision. You need to trust the person and be confident they will always act in your best interests and be confident they have the capacity, ability, and knowledge to undertake and deliver on this responsibility.
Types of Power of Attorneys:
A Specific Power of Attorney gives the attorney authority to act within a specific set of rules. For example, to manage only your investment property, or to make financial decisions on your behalf for a defined period, say, while you are overseas on holidays.
A General Power of Attorney gives the attorney authority to act on your behalf about any legal and financial matter. This type of power of attorney ceases to be valid if you lose your mental capacity.
An Enduring Power of Attorney gives the attorney the same authority as the General Power of Attorney to act on your behalf on any legal and financial matter. The significant difference is that an Enduring Power of Attorney also gives your attorney the authority to continue to act after you lose your mental capacity.
The specific rules and powers applying to each type of attorney may vary across States and Territories, so you should check the relevant rules for your State/Territory.
You may set whatever limitations or conditions on the power you choose. If an attorney does not follow your directions or does not act in your best interests, you should revoke the authority. It is best to inform the attorney of this revocation in writing as should any organisation that depends on the power to act on your behalf.
It is important to understand that a Power of Attorney does not authorise the person to make medical decisions on your behalf. This is the responsibility of an Enduring Guardian and or an Advance care Directive.
If you are asked to be or are acting as an attorney, you must
- Keep you financial and legal affairs separate from those of the person who granted the power (grantee)
- Keep reasonable accounts and records of the financial and legal dealings
- Not benefit from being an attorney unless expressly authorised by the grantee
- Always act honestly and in the best interests of the grantee.
All Powers of Attorney cease on the death of the grantee. At that point their body becomes the responsibility of their executor who starts managing the estate according to the terms of the will or government regulation if there is no will.