Enduring powers of attorney explained

A lot of people have heard of a Power of Attorney however most do not fully appreciate
the extent of its power, the benefits it delivers or the types of Powers of Attorney that
A Power of Attorney is a useful legal document used to allow someone to handle your
affairs in a variety of circumstances. It is often used if you are planning to go overseas,
taking an extended holiday, suffer from poor health, have an accident or reach a stage in
your life when you need greater assistance managing your affairs.
In this article we examine why appointing a Power of Attorney is so strongly
recommended by lawyers and explain the difference between a General Power of
Attorney and an Enduring Power of Attorney.
Selecting a person to act in your place
The appointment of your Attorney enables that person (or people) to act in your place,
and do the things you would normally do yourself. Such as signing documents, paying
the bills and doing the banking. The person you choose, your Attorney, has the right to
stand in your shoes when you wish them to look after your affairs. In reality they can
enter into agreements in your name and on your behalf.
Therefore as a result of the power of the appointment it is critical that you select the right
person to act in that capacity. The person does not have to be a lawyer. In fact it is
important for the person to know you well and for you to trust them. It is often a trusted
family member but whoever it is must be over 18.
The difference between a General and an Enduring Power of Attorney
Not all Powers of Attorney are the same.
A General Power of Attorney is a legal document that gives the Attorney the authority to
make decisions about financial and legal matters on behalf of the person who appoints
them. This power lasts only for as long as the person who appoints them has mental
capacity. The general power ceases to operate if the person that has made the Power of
Attorney loses capacity to make decisions. A General Power of Attorney is often used as
a tool of convenience. For example, a person might appoint a General Power of Attorney
to look after their financial and legal affairs in Australia while they travel overseas.
An Enduring Power of Attorney is similar to a General Power of Attorney except that the
powers continue, or endure, in the event the donor loses mental capacity.
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In New South Wales, a document appointing an Enduring Guardian can be used
alongside an Enduring Power of Attorney to authorise medical and health decisions.
An Enduring Power of Attorney, unlike the General Power of Attorney, must be
explained to you by a prescribed witness, that is, a lawyer.
It is important to be aware that an Enduring Power of Attorney becomes void when you
What happens if you lose capacity without having a Power of Attorney?
The probability that someone can lose capacity is often not properly considered by
people. However if you do not have an Enduring Power of Attorney and develop a
mental incapacity you are therefore unable to manage your financial affairs. It is too late
then to have a lawyer prepare such a document as you do not have capacity to sign it.
The difficulty is that no person automatically has the right to manage your assets. Not
even if they are your husband or wife.
This therefore has a colossal effect on all the financial decision making thereafter with
your bank accounts, your jointly owned home, shares or other jointly owned assets or
To have decisions made in these circumstances would then involve an application to the
NSW Civil and Administrative Tribunal (formerly the Guardianship Tribunal).
The applicant, usually a family member, would apply to become your financial manager.
However this is subject to that person being deemed fit (as in ‘fit and proper’) by the
Tribunal. Failing this finding of being ‘fit’, the Tribunal may appoint the NSW Trustee and
Guardian to manage your affairs.
If the NSW Trustee and Guardian is appointed, your spouse may need to consult with a
government department to deal with your ongoing financial decision making until your
When does the Attorney’s power begin?
You may nominate when your Attorney’s power is to begin. If you do not name a date or
an occasion, it begins immediately. On the other hand, if you lose the capacity to make
such decisions before the date or occasion you name, the power begins at that point.
It is important to note that even if you give your Attorney power immediately, you may
also continue to make decisions yourself while you are able to do so. By providing a
Power of Attorney you do not restrict or give up the right to make financial decisions as
you do today.
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Today Powers of Attorney are used as a precautionary step by sensible adults rather
than as a stop gap measure for an overseas trip. Professional groups such as
accountants and financial planners, along with lawyers all strongly recommend that their
clients of all ages and walks of life, make a Power of Attorney so their assets are not
locked up if a person loses legal capacity to sign documents and their loved ones are
put through avoidable stress.
If you or someone you know wants to know more don’t leave it to late, please contact us
on 02 9191 9293 or email mail@rnlegal.org.