What is the power of attorney?
A power of attorney is a legal document that authorises another person to do certain things for you.
For example, the day before you're going away for a holiday, a developer makes an offer "too good to refuse" for your house. The contract of sale must be signed, but you will be sailing down the Hootchee Pootchee River hunting crocodiles. What to do? The answer is simple: sign a power of attorney and authorise your attorney to sign the contract for you.
There are different types of powers of attorney:
- medical (not in all States/Territories);
- enduring financial; and
- guardianship (not in all States/Territories);
But, don't worry too much about this now, we explain these later.
There are many good reasons to make a power of attorney.
- You can use it for a specific task, like the one just described.
- You can also use it to plan for the future. For example, if you are injured in a car accident and can't make decisions because you are unconscious. Your attorney can make decisions about your finances if you've signed a financial enduring power of attorney.
Choosing an attorney
The only legal requirement is that the person is over a certain age specified in the legislation (e.g. 18 in Victoria) and is mentally competent. Often an attorney will be a relative, close friend or an independent person such as a lawyer, accountant or an employee of a trustee company.
The choice is yours. But there are a few points you should keep in mind.
- You must be able to trust the attorney. Choose someone who knows you and what you want. Think of the attorney as someone who stands in your shoes.
- Make sure that the attorney does not have a conflict of interest that would make it impossible to act in your best interests.
- "Horses for courses" – choose the person who can do the job. The person you appoint to make financial decisions may not be the same person you would want to make decisions about your health care or lifestyle (guardianship).
- Make sure that the person you choose understands your wishes, e.g. is there any sort of medical treatment you would not want? Do you have fixed ideas about accommodation if you become disabled? Some people write down their wishes. This can be useful if there is conflict later.
If the State legislation allows, you can choose more than one attorney. There are pros. and cons. if you do this. Two attorneys might disagree about the decision to be made.
Alternatively, two attorneys can be handy if one is likely to be away a lot or you don't completely trust one to make decisions alone.
You must remember that you are giving your attorney a lot of power - the power to make decisions that are legally binding.
Powers of attorney can be useful. But use them carefully! Remember:
- only choose a person you trust to be your attorney;
- if you are unhappy with your attorney - cancel the power of attorney and appoint someone else (we tell you how to do this in the other fact sheets).
Can I make one?
You must be
- over the age specified by the law; and
- have the mental capacity to make the appointment.
What is "capacity"
There is no simple test of capacity. In general though to have "capacity" you must understand:
- the nature and effect of the power of attorney;
- that you can revoke the powers of attorney until you lose "capacity"; and
- that the decision is your own.
So if you are making a financial enduring power of attorney, the test for capacity will be that you understand:
- the nature of the power you are giving someone;
- that the power will continue after you lose the ability to make financial decisions;
- that the person(s) you have appointed will be making these decisions on your behalf, effectively standing in your shoes; and
- that you can revoke these powers at any time while you retain capacity.
Make a certified copy
It is a good idea to make a certified copy for your attorney(s) (or agent and/or guardian and their alternatives) and your solicitor or accountant and bank (if financial).
Check with your State authorities or legal practitioner who can certify the copy and the words that must be used.
Do it yourself?
You can of course get assistance from a range of professionals, including a solicitor, the Public Trustee, a private trustee company, a financial planner, legal aid, or perhaps a representative association (e.g. the Alzheimer's Association).
However, although it can at times be complicated, there is excellent free help available in every State and Territory, which makes DIY viable if you are prepared to spend a little time in research.
Your best first port of call is the Office Of The Public Advocate (or Public Guardian) in your State or Territory. They will be able to offer advice and direct you to the appropriate forms.
Last Updated – June 2012