What is an Enduring Power of Attorney and why do I need one?

What is an Enduring Power of Attorney?

An enduring power of attorney is a legal document that allows a person to appoint an attorney to act on their behalf in relation to their legal and financial affairs, including buying and selling assets such as real estate or shares, and operating bank accounts. The attorney cannot make health and lifestyle decisions for you. This is covered in a separate document called an enduring guardianship. For information about enduring guardianships, please click here to be taken to What is an Enduring Guardianship and why do I need one?

An enduring power of attorney can be broad such that your attorney may be granted authority to deal with all your legal and financial affairs, or be limited to certain tasks as specified in the document. For example, the document may specify that an attorney can only act to sell your house. You can also place conditions on how those tasks are to be carried out, such as a requirement that an attorney submit accounts to your nominated accountant every year for an audit.

You can decide when your enduring power of attorney document commences. For example, it can commence immediately once accepted and signed by the attorney, or once a medical practitioner considers that you are unable to manage your affairs and provides a document to that effect. This may be because of a loss of mental capacity. Once mental capacity is lost, your power of attorney cannot be revoked.

An attorney cannot deal with a person’s assets following their death. Once a person dies, their enduring power of attorney no longer has any effect and is not to be confused with a Will.

Why do I need an Enduring Power of Attorney?

It is a common misconception that an enduring power of attorney is a document reserved for the old or infirm, but it is probably as important if not more, for those with young families. We will ask almost all clients to consider preparing an enduring power of attorney when preparing their Wills, as part of their suite of estate planning documents. It is an important document to have as a precaution whilst you have the capacity to select a person whom you trust to make legal and financial decisions. Once capacity is lost, you cannot select someone to be your attorney.

If you do not have an enduring power of attorney in place and suddenly lose capacity, an application will need to be made to the NSW Civil and Administrative Tribunal (NCAT) for the appointment of a financial management through a Financial Management Order to deal with your financial affairs.

If no one steps forward to make this application to be your financial manager, NCAT may Order the NSW Trustee and Guardian to be your financial manager. This means that the person making the decisions concerning your financial affairs are not family or friends who know and care about you, they are strangers who are paid to do so. They may not visit you, they may not know your likes and dislikes, your hopes and plans. They may not know a thing about you.

Having an enduring power of attorney in place ensures that the selection of the person in control of your financial affairs in the event that one is required, remains in your control and saves your loved ones from having to go through the process of applying for a Financial Management Order with NCAT.

If you hold concerns that the person you select may be unwilling or unable, you may appoint them to act jointly and/or severally with another person or appoint them in the first instance and have a substitute if they are unable.

If you are interested in preparing an enduring power of attorney, or would like to speak with a member of our experienced Estate Planning Team contact Solari and Stock on 8525 2700, click on the Book Now button below, alternatively click here to request an appointment. Our Estate Planning Team includes Rebecca Exley, Michael Solari, Nicole Commandeur and Valentina Abouzeid.

Article by Mia Doncevski
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