Leaving authority with a Power of Attorney
A Power of Attorney is a powerful document that gives a nominated person (the Attorney) the authority to act on your behalf. In New South Wales, this power is limited to only make financial and property transactions on your behalf. This can be anything from operating your bank account to selling your house. The Attorney has to act on your behalf or act in your best interests.
There are a number of reasons why anyone would want to execute a Power of Attorney – however a common reason is that the person granting the authority (the Principal) is unable to be present or cannot participate in the transaction. Another is if the Principal is growing old, and they would like the Attorney to handle their matters for them.
A Power of Attorney can be drawn up to specify exactly what powers the Principal wants to give to the Attorney, or it can be a general power that gives the Attorney the authority to deal with everything. It is important to consider what kind of powers should be granted to the Attorney before executing a Power of Attorney.
A Power of Attorney is usually only valid in whichever state or country it is drafted for. Should you execute a New South Wales Power of Attorney, for example, there is no guarantee that it would be accepted as a valid Power of Attorney in a foreign country, or even in Queensland or Tasmania. In such a situation you should obtain a Power of Attorney from that country or state that the Principal wishes it to operate in.
As a rule of thumb, if you have assets in a particular state or country, should you want someone to take care of those assets, you should execute a Power of Attorney from that state or country.
An ordinary Power of Attorney will stop working if the Principal suffers some sort of mental incapacity. In such circumstances the Principal will have to execute an Enduring Power of Attorney. An Enduring Power of Attorney has different execution requirements and is a powerful document that is commonly executed alongside a Will.
A Power of Attorney does not give the Attorney the right to make decisions affecting the Principal’s health or welfare. In order for the Attorney to be able to make those sorts of decisions, they will be needed to be appointed as an Enduring Guardian. Separate documentation must be prepared and executed in order to enable this.