With an aging population, loss of capacity is increasingly common and presents a range of difficulties that families can struggle to cope with.
To ensure the correct people to act on your behalf if you are unable to, you should consider preparing a power of attorney setting out who your attorneys are, how they should act and what activities they can undertake on your behalf.
What is a power of attorney?
A power of attorney is a legal document allowing someone to make decisions on your behalf.
Powers of attorney can be general (appointing someone for a specific purpose and during a specific time) or enduring (appointing someone to make decisions on your behalf, with the appointing persisting through loss of capacity).
What can my attorney do?
Attorneys have powers under the relevant law allowing them to act for both personal and financial matters.
Ultimately however, what an attorney can do is subject to the terms of the document appointing them.
The terms of any power of attorney should accurately reflect your wishes.
There are however some important key powers in addition to the laws in each state that clients should consider adding to their attorney documents, including powers allowing your attorneys to:
- act in conflict transactions. For example, allowing your spouse to act in relation to your assets despite there being a benefit to them (direct or indirect);
- provide gifts (noting that these must be reasonable). For example, birthday presents for children and grand children;
- update your superannuation nominations. The combination of changing superannuation laws and the often fluid nature of client circumstances can mean that your spouse might need to update any superannuation nominations. Not having this power can result in unintended tax consequences if you have lost capacity and your attorney cannot redirect your superannuation benefits.
Does it matter what state I live in?
It is critical to be aware that each state has its own laws governing the appointment of attorneys, different forms and differing ways for attorneys to act.
While there is legislation allowing powers of attorney prepared in one state to be accepted in other states, it can often be difficult when dealing with third parties (in particular land registries) when the form does not match the requirements of the particular state.
What else should I consider when appointing an attorney?
Given the nature of the powers, your attorney(s) should be people you trust implicitly.
It is however still important to appoint someone. Failure to nominate someone to act for you can result in your family having to spend large sums of money (and at great emotional cost) to be able to make decisions in your best interests if you lose capacity.
Ensuring your estate planning documents are appropriate for your circumstances is something everyone needs to consider to reduce the financial and emotional burden on their families if you lose capacity.
For those that are concerned about an attorney acting outside the terms of their appointment, keep your eye out for our upcoming post on avenues for challenging a power of attorney.
If you would like us to review the appropriateness of your existing attorney documents or update your attorney appointments, feel free to get in touch with our legal team.
General Advice Disclaimer
Information provided on this website is general in nature and does not constitute financial or legal advice. Every effort has been made to ensure that the information provided is accurate, but information may become outdated as legislation and new government announcements are made. Individuals must not rely on this information to make a financial, investment or legal decision as it does not take into account their personal circumstance. Before making any decision, we recommend you consult a licensed advisor or legal practitioner to take into account your particular objectives, circumstances and individual needs.