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Here we examine what these
documents are used for, when and why they are important, how you can
go about getting one ... and some things to avoid in the process.
A power of attorney is a legal
document that authorises another person to do certain things for
you. There are different types of powers of attorney:
- financial;
- medical (not in all
States/Territories); and
- enduring.
The types of decisions that can be
made depends on the laws in each State and Territory, but financial
decision making is generally available, and in most States and
Territories lifestyle and health decisions can also be made.
Why bother?
There are many good reasons to make a
power of attorney:
- you can use it for a specific
task, for example, you can authorise someone to operate your
bank account if you are incapacitated;
- you can also use it to plan for
the future. For example, if you are injured in a car accident
and can't make decisions because you are unconscious, your
attorney can make decisions about your finances if you've signed
a financial enduring power of attorney.
A power of attorney is a good way
to minimise future stress for your family, in anticipation of a time
when you may be unable to make decisions on your own as a result of
an accident or disease. It will also prevent problems if there is a
possibility of some impairment e.g. you are entering hospital and
may be incapacitated for some time, or there is a risk you will
suffer a mental incapacity. Where a medical power of attorney can be
made, it will also be possible to nominate the person you wish to
make these most personal decisions on your behalf.
Choosing an attorney
Often an attorney will be a relative,
close friend or an independent person such as a lawyer, accountant
or an employee of a trustee company. The choice is yours, but there
are a few points you should keep in mind if you want to prevent
problems in the future:
- you must be able to trust the
attorney. Choose someone who knows you and what you want. A good
way to do this is to think of the attorney as someone who stands
in your shoes;
- make sure that the attorney does
not have a conflict of interest that would make it impossible to
act in your best interests;
- confirm that they will be
available to act when they are needed;
- ensure they are young enough
that they will still be appropriate when an enduring power of
attorney takes effect, which may be years in the future;
- 'horses for courses' - choose
the person who can do the job. The person you appoint to make
financial decisions may not be the same person you would want to
make decisions about your health care;
- make sure that the person you
choose understands your wishes e.g. is there any sort of medical
treatment you would not want? Some people write down their
wishes. This can be useful if there is a dispute when the power
becomes active.
If the State/Territory legislation
allows, you can choose more than one attorney. There are pros and
cons if you do this. Two attorneys might disagree about the decision
to be made. Alternatively, two attorneys can be handy if one is
likely to be away a lot or you don't completely trust one to make
decisions alone.
Formalities
There are requirements in each State
and Territory that govern the formalities that must be followed for
the power of attorney to be valid. This may include:
- the number of witnesses, and
whether they must have certain qualifications (e.g. a medical
enduring power of attorney that must be witnessed by a person
able to take a statutory declaration);
- a statement that the attorney
accepts their role.
Beware
You must remember that you are giving
your attorney a lot of power - the power to make decisions that are
legally binding. Powers of attorney can be useful, but use them
carefully! Remember:
- only choose a person you trust
to be your attorney;
- if you are unhappy with your
attorney, cancel the power of attorney and appoint someone else.
Social security benefits
It is not necessary to use a power of
attorney if the only reason is to collect a social security benefit
on behalf of another person. A person who receives payments through
Centrelink can appoint you as a nominee. You can also make
arrangements with the recipient's bank to withdraw funds from their
account by using a bank authority.
Do I need a lawyer?
It is relatively inexpensive to hire a
lawyer to prepare your power of attorney. Given that some powers of
attorney involve significant sums of money and/or assets, using a
lawyer can be a worthwhile investment.
How do I use it?
Once you've signed a power of
attorney, put it in a safe place and give a copy to your attorney.
Cancelling powers of attorney
You should check the requirements
in your State/Territory. It is sometimes enough to simply tell the
attorney that you don't want them to make any more decisions for
you. The problem is that it can be difficult to prove what you said.
The best way is to write on a piece of paper that you are cancelling
the power of attorney and send it to the attorney by registered mail
(make a copy), or to fill in the appropriate form as prescribed in
your State/Territory.
Note. There are special rules for
irrevocable powers of attorney.
If you do cancel a power of
attorney, make sure you destroy all copies, including the attorney's
copy.
And don't forget to tell your banks
or other agencies that have dealt with the attorney. It is also
possible for a Court or Tribunal to cancel a power of attorney, for
instance if it not being used in your best interests.
Changing powers of attorney
If you want to change something in
your power of attorney, e.g. the person you appointed as attorney,
the easiest way is to prepare a new power of attorney. You can make
changes to your original, but the document might become messy and
confusing. If you want to change the original (and not simply make a
new power of attorney) get some professional advice.
Disclaimer:
The information contained above has been provided as a general service.
Any references to specific financial, legal, accounting, or taxation
issues are done so in the context of general information and should not be
relied upon as fact or construed as advice by the us in any of these
areas. You should consult a relevant financial, legal, tax or accounting
professional to assist in your particular circumstance.
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