A Power of Attorney is a powerful and useful document where a Principal (you) appoints a nominated person to deal with the Principal's assets and financial resources on the Principal's behalf.
You should consider preparing a Power of Attorney if:
You are over 50 years old;
You have concerns about your future capacity to manage your financial affairs;
You have health issues that may affect your capacity to make decisions; or
You expect to be unavailable, interstate or overseas for some time and have assets in Australia that require management.
Limits, Registration & Multiple Attorneys
A Principal may impose limits on the extent of the Power of Attorney. The limits may be in the form of limiting the type of assets that the attorney can deal with, or limiting the period that the Power of Attorney is valid.
For example, if you are planning to work overseas for an extended period such as 2 years and you have assets in Australia that require management. You should prepare a Power of Attorney and appoint an attorney who resides in Australia to deal with your Australian assets. Under the Power of Attorney, you can direct the attorney to transfer monies between your bank accounts in Australia and the attorneys will be able to attend a bank and conduct the transfers on your behalf. You should also set a time limit on the validity of the Power of Attorney where it expires in 2 years upon your return to Australia.
If the Principal anticipates that an attorney will need to deal with real estate, the Principal must register the Power of Attorney with the NSW Land Titles Office, now called the Land Registry Services. This means that under the Principal's direction and instruction, the attorney may sell the Principal's property, attend auctions and purchase property on the Principal's behalf. The current registration fee for a Power of Attorney with Land and Registry Services is $147.70 (incl. GST) (as of June 2021). Registration of the Power of Attorney is not required if the attorney does not need to deal with real estate.
A Principal may make the Power of Attorney enduring which means that the Power of Attorney will still be valid after the Principal loses mental capacity.
Many people appoint a primary attorney and a default attorney in case the primary attorney dies or is unable to fulfil their duties as an attorney for whatever reason. A Principal may also appoint multiple primary and default attorneys in a joint capacity where they can act on an independent or joint basis. This means that the attorneys may attend to dealing with an asset together or independently without the other attorney.
If you wish to make any changes to your Power of Attorney, please see a lawyer. Do not make any amendments or mark the Power of Attorney document without first obtaining legal advice.
Duties of an Attorney
Nominated attorneys (both primary and default attorneys) will need to sign in acceptance of their appointment. The usual wording of their acceptance is as follows:
“(a) I must always act in the principal’s best interests;
(b) As an attorney I must keep my own money and property separate from the principal’s money and property;
(c) I should keep reasonable accounts and records of the principal’s money and property;
(d) Unless expressly authorised, I cannot gain a benefit from being an attorney;
(e) I must act honestly in all matters concerning the principal’s legal and financial affairs;
(f) Failure to do any of the above may incur civil and/or criminal penalties.”
The above acceptance requires attorneys to follow the directions of the Principal and act in their best interests. The attorney will also need to respect the limits imposed by the Power of Attorney (if there are any).
Generally, attorneys are not permitted to use the assets and financial resources of the Principal on any other person other than the Principal. However the Principal can make exceptions to this rule in their Power of Attorney. The most common exceptions are:
When a Principal appoints a spouse as their attorney, the Principal will permit the attorney to use the Principal’s assets and financial resources towards the attorney’s medical and reasonable living expenses;
When a Principal permits the attorney to apply the Principal’s assets and financial resources to the Principal’s dependents, such as children or grandchildren for their medical and reasonable living expenses; or
When a Principal permits the attorney to apply the Principal’s assets and financial resources for reasonable gifts such as birthdays and anniversaries of their loved ones.
Other Complimentary Documents
Many people also prepare an Appointment of Enduring Guardianship (a document that deals with medical and lifestyle decisions) and an Advance Care Directive (medical treatment preferences). Unlike the Appointment of Enduring Guardianships, a Power of Attorney does not require a Principal to lose mental capacity in order for the attorney to act. Read more about Appointments of Enduring Guardianships in our detailed post: https://www.tsuilawyers.com/post/appointment-of-enduring-guardianship-the-hard-conversation-about-life-death-medical-decisions
The above information is based in the NSW jurisdiction.
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*** Disclaimer:
Information on this website or post does not constitute legal advice and that electronic dialogue with readers does not constitute any form of client engagement unless specifically agreed.
The information is provided on a general basis only. We strongly recommend that you seek your own independent advice from a lawyer about your situation.
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