You may have heard the term ‘Power of Attorney’ before, but are you familiar with what it actually is and if it is right for you?
If you have always wanted to know more about what having a Power of Attorney in place means, read on.
What is a Power of Attorney?
A Power of Attorney is a legal document in which one person (the principal) appoints another to become their attorney and affords them the authority to manage their healthcare and/or financial and property matters for them.
If a Power of Attorney document is drafted correctly, it can form a valuable part of your estate plan as it acts as a way of protecting your assets and finances in case you are unable to oversee them any longer.
Most people view their Power of Attorney as an accompaniment to their Will and will have them prepared at the same time. Similarly, it is important to have your Power of Attorney reviewed regularly to ensure the nominated attorney is still the most suitable person.
Who should have a Power of Attorney?
While it is common for elderly people to appoint their child or children as their attorney for when they become unable to handle their own affairs, any adult can appoint someone else as their attorney. Powers of Attorney can be put into place at any age to come into effect at a later time and are also useful if you hold property or other assets in a country in which you do not reside, or if you are travelling and may require someone to handle your financial or property matters while you are overseas.
Who should I appoint as my attorney?
If so appointed, an attorney will have the authority to make decisions about your finances, so it is crucial that you only appoint someone who is honest and has your best interests at heart.
Your nominated attorney must be at least 18 years of age and must not be your paid carer, health provider or service provider at a residential service at which you live. Appointing an attorney who works in the financial, property or health industry is not essential.
You may wish to appoint more than one attorney. A joint appointment may assist in ensuring that each attorney holds the other accountable in the instance that you appoint the attorneys to act jointly. In this circumstance, both attorneys will need to act in conjunction with one another and both agree on decisions relating to your affairs.
It is advisable that you appoint a substitute attorney in the instance that the first person or people appointed are unwilling or unable to act as your attorney.
An attorney’s duties
The attorney is bound to their duties, which include:
- making decisions that are in your best interests;
- not benefitting from their role as your attorney;
- obeying the instructions stipulated by you;
- not using your money to make donations or gift to others;
- only entering into transactions where no conflict of interest between you and the principal will arise;
- ensuring their money is kept separate to yours; and
- keeping adequate records and receipts for transactions made on your behalf.
Where an attorney has powers over your healthcare issues, they must also:
- choose the least intrusive modes of care possible;
- consider what choices you would make based on your own views and wishes;
- consider the advice of health professionals who are caring for you; and
- ensure their decisions are contributing to your health and wellbeing.
How can I be sure my attorney will do the right thing?
Usually, when a trusted person is appointed to perform duties on your behalf, they will undertake the role in the way they are supposed to. Unfortunately, however, this power is sometimes abused, particularly where the elderly are concerned.
Some ways in which attorneys use their powers in the wrong way include making large cash withdrawals or transfers, selling property, making amendments to Wills or failing to pay bills or other expenses.
If you suspect that your appointed attorney has been abusing their powers it is possible to revoke the appointment provided you have the requisite capacity to make such revocation.
Powers of attorney may also come to an end if your relationship status changes, your attorney becomes bankrupt or insolvent, is no longer capable or dies. It is important that you discuss these scenarios with your solicitor prior to appointing an attorney(s).
Once your solicitor has prepared your Power of Attorney document you should store it in a safe place and also provide your nominated attorney(s) with their own copy. For your nominated attorney to be able to use the document, they will require a certified copy of it.
For advice on preparing a Power of Attorney document please contact Cairns Wills and Estates Lawyers today.