Creating an up-to-date Will is only one step in planning your future. It's essential you also consider who will manage your affairs if you become incapacitated. An Enduring Power of Attorney in Australia is a legal document that allows you to appoint a person, also known as the attorney, to make decisions about your property or financial affairs.
It depends on the jurisdiction, but typically a general power of attorney ceases to have power once you lose the mental capacity to make financial decisions. On the other hand, enduring power of attorney continues to have control even if you lose the mental capacity to manage your affairs.
When you appoint an enduring power of attorney, you get to choose who you want to manage your financial affairs, even if you lose mental capacity. If you lose cognitive ability without an enduring power of attorney, no one may have the legal authority to manage your financial affairs. Your family would then need to apply to the relevant authority in your State or Territory to appoint someone.
Anyone above 18 can make an enduring power of attorney if they have the mental capacity to understand the nature, responsibilities and range of decisions that a power of attorney is authorised to make.
A person who has a cognitive disability may still have the capacity to make an enduring power of attorney. Still, it would depend on their level of understanding about the power of attorney.
Therefore, if there is any doubt about whether a person has the mental capacity to make an enduring power of attorney, a qualified medical practitioner would assess the person's understanding beforehand.
The attorney you choose to appoint can have tremendous power over your affairs. Therefore, you should select an attorney you trust and who will manage your finances responsibly.
If your financial matters are complex, you should appoint an attorney capable of handling complicated finances and is willing to do so. In addition, you can choose to nominate a family member, a close friend or a trustee company.
You can appoint more than one attorney. When selecting more than one attorney, you should choose people who can efficiently work together in your best interests. You can choose to have your attorneys act in the following ways:
If you give your attorneys the ability to act separately, the enduring power of attorney will continue even when one of the attorneys can no longer serve. However, suppose you appoint your attorneys to cooperate.
If one of the attorneys dies or becomes incapacitated may automatically end the enduring power of attorney. In addition, if your first choice is unable or unwilling to act, you should consider appointing a substitute attorney.
The start date depends on the state, but typically you can choose when you would like your enduring power of attorney to start.
For example, you can choose to have it start right after you appoint the attorney, on a future date or only when your attorney thinks you need help managing your financial affairs.
Additionally, you may wish it to start only when a doctor provides evidence that you can't manage your affairs. You indicate in the power of attorney document when you want it to start. If you don't include a start time, it will come into effect when the attorney accepts the role.
You can give your attorney the power to make any decision about your finances or property that you would usually make yourself. These powers include paying bills, selling property, making investments, accessing cash and buying or selling shares.
You control the powers you give to the attorney by placing limits or conditions in the enduring power of attorney. For example, you can give the attorney authority to access cash but not to sell a property.
In addition, if you are a member of a self-managed superannuation fund, your attorney can be appointed as a trustee of the fund in your place if you become incapacitated.
Most states across Australia don't allow an enduring power of attorney to make medical or lifestyle decisions. However, if you want to appoint someone to make these decisions on your behalf, each State and Territory has a procedure.
You can revoke your enduring power of attorney at any time, provided you have the mental capacity to understand what you are doing at the time you make the decision. Typically, you can cancel a power of attorney by notifying the attorney verbally or in writing.
If you do not notify the attorney about the change, they can keep handling your finances and property. After it's finalised, you should destroy the original and any copies of the enduring power of attorney.
An enduring power of attorney ends under several circumstances. These include:
The enduring power of attorney may also end for more complex legal reasons, such as bankruptcy.
An enduring power of attorney in Australia is additional protection for you and your estate. Should you lose the capacity to make important decisions about your financial matters, you can rest assured that you have taken the necessary measures to protect your affairs. For more helpful reading about planning your estate, check out the links below:
Disclaimer: The content of this blog is intended to provide a general guide to the subject matter. This blog should not be relied upon as legal, financial, accounting or tax advice.