A power of attorney allows someone to represent you or perform an act on your behalf in relation to financial and legal matters. It gives you peace of mind knowing that there is someone who will look after your affairs if you are unable to do so.
The main benefit of a power of attorney is to ensure that your financial affairs can be managed at all times, under any circumstances. Accessing funds from investments in your name (i.e. rollovers and changes to income payments of account-based pensions) can only be made by the owner. If you are incapacitated in some way, it is essential that you are able to meet your financial obligations and that someone you trust manages your affairs.
Your attorney’s signature on a document has the same legal force as your own signature. Therefore, you should take great care when deciding who to appoint as your attorney. You should also obtain legal advice as to who an appropriate attorney would be and to ensure that the correct paperwork is completed and recorded.
There are three main types of power of attorney:
- General power of attorney
- Enduring power of attorney
- Enduring power of attorney for personal/health matters (medical).
The general power of attorney allows your attorney to act on your behalf, usually for a specific purpose or fixed period of time such as allowing another person to handle your affairs whilst you are temporarily overseas. This is revoked automatically if you become mentally incapacitated. It is also revoked if you die or become bankrupt.
An enduring power of attorney remains valid even if you lose your mental capacity. It is appropriate for all adults to have an enduring power of attorney. The attorney should be someone you can trust to look after your financial interests in a professional manner.
You can also appoint an enduring power of attorney to look after personal health matters. This allows the attorney to make only medical decisions on your behalf.
Each state has separate legislation in relation to enduring, general and medical powers of attorney. Therefore, if you have investments interstate, you should arrange for an enduring power of attorney in each state in which you have investments.
You should review your enduring power of attorney periodically to ensure that your nominated attorney(s) is still capable of acting on your behalf. If your attorney(s) dies or becomes incapacitated, you will need to arrange for your legal adviser to change your documents and register a new attorney.
