What is an Enduring Power of Attorney?

A Power of Attorney is a legal document that grants a person (the Attorney) the authority to perform certain functions on someone else’s behalf (the Donor). The most common forms that a Power of Attorney come in are “General” &  “Enduring”. There is a significant difference between the General and Enduring Power of Attorney documents. The Enduring Power of Attorney is explained below:

Enduring Power of Attorney

The main difference between the Enduring Power of Attorney and the General Power of Attorney document is that the Enduring Power of Attorney continues to be effective if the Donor loses mental capacity.

An Enduring Power of Attorney is a legal agreement that allows you, the donor, to appoint someone you trust to act on your behalf in respect to financial and property decisions. This attorney can operate your bank accounts, pay your bills, and buy and sell property (including shares). They cannot make medical or lifestyle decisions for you (for that, you would need to appoint an enduring guardian).

The benefit of an Enduring Power of Attorney over a regular power of attorney is that it remains in force even if you lose full legal capacity. Should you, at some point after signing the document, suffer from dementia or an other mental illness, or be involved in an accident that causes brain injury, you may no longer be able to manage your own affairs. This is an eventuality that might befall any one of us at any time, and so it is one that all of us would be wise to prepare for. If you do not have an Enduring Power of Attorney in place and you lose the ability to responsibly make your own financial and property decisions then there may be no one that you know and trust who has the legal authority to manage your estate, and an administrator may have to be appointed for you.

The Enduring Power of Attorney extends beyond the mental incapacity of the Donor and therefore constitutes a greater risk. For this reason it is a requirement in most States that an Enduring Power of Attorney be explained to the Donor and witnessed by someone that is described as a prescribed witness. A prescribed witness is a Solicitor, Barrister or Clerk of the Court or someone that is described under the Power of Attorney Act 2003 as a prescribed witness.

In some States, the Enduring Power of Attorney can also be limited to certain situations as desired by the Donor. (noted in individual forms for each State).

If you do choose to make an Enduring Power of Attorney then your attorney has enormous powers over your financial affairs, effectively you could be handing over the key to your life savings. Because of this, it is important that you think carefully about who you would like to appoint. Your attorney must be at least 18 years old. You might choose a trusted partner, family member or close friend. Alternatively, you may prefer to elect a professional person such as an accountant or lawyer, or the Public Trustee or a trustee company, although in this case fees will apply. If your financial affairs are complicated, make sure that you choose as your attorney someone who is able to understand them and manage them effectively.

You can only make a valid Enduring Power of Attorney when you are still capable of making reasoned decisions: you must be able to understand the nature and effect of the document you are signing – the range of powers granted to the attorney on your behalf, and your attorney’s ability to make decisions without consulting you – and the nature and extent of your estate. In cases where it is unclear if a person has the mental capacity to make an Enduring Power of Attorney, a lawyer and health professionals (a neuropsychologist, for example, or geriatrician) should be consulted prior to signing, and asked to provide a report in writing.

An Enduring Power of Attorney is legally binding, and to be made null and void must be revoked by either the donor or the appropriate state tribunal body.

If you do decide to make an Enduring Power of Attorney, you should complete and sign the form drawn up by your state. Your signature on this form must be witnessed – check local regulations as to who is allowed to act as a witness. Your attorney must also sign the form. You may be required to register the Enduring Power of Attorney, particularly if you own real estate – again, check state guidelines. Even if it is not a legal requirement, you may choose to register it so that it is on record as a public document, safe from loss or destruction, and readily admittable as evidence that your attorney has authority to deal with your property and financial affairs. If you do not register it, make sure that both you and your attorney keep a copy of the document in a safe place, and that someone else knows where it is.

You may have additional requirements for your Enduring Power of Attorney. For instance, you might want to place limits on the attorney’s power so that he can pay bills but not sell property. In this case you should seek legal advice.

Mental incapacity is tragic and rarely preventable. It is highly recommended that all adults consider setting up an Enduring Power of Attorney so their estate is looked after if they themselves can no longer take responsibility for their own affairs. For an online, easy-to-use Power of Attorney form visit www.legalwill.com.au

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