What is a Power of Attorney?
A Power of Attorney is a document which authorises another person to make certain types of decisions on your behalf, such as financial, legal, lifestyle and medical decisions. The person you appoint is called your 'Attorney'.
What are the advantages of making a Power of Attorney?
Most of us have the good fortune of being able to make our own decisions and control our lifestyle choices. However, when illness or incapacity strikes without warning, every aspect of our future may rely on the decisions of others. Having effective Powers of Attorney in place will give you control over who makes decisions on your behalf if you lose the capacity to do so yourself, or you simply need someone to help manage things for you.
In what situations would it be useful to have a Power of Attorney?
In addition to significant upheavals in life, there are many everyday situations where having a Power of Attorney in place makes good sense.
- Being away from home – If you are overseas or interstate, it may be difficult for you to sign documents in person, such as contracts or bank documents. This is particularly so if you will be away for a lengthy period of time. In these situations, your Attorney could do this on your behalf.
- Entering old age - As your physical and cognitive ability declines, it becomes more likely that you will need someone to make decisions and perform actions on your behalf, if you are unable to do so yourself.
- Loss of decision-making capacity - A person may lose decision-making capacity gradually, such as from dementia, or suddenly, such as from an accident or medical emergency. Once you are in this situation, unfortunately, it is too late to appoint someone as your Attorney.
Which Power of Attorney do I need?
There are several types of Powers of Attorney and each one relates to a specific aspect of a person’s decision making.
a) Enduring Power of Attorney (EPOA)
An Enduring Power of Attorney is the most common in an estate planning context and will continue to have effect even after you have lost decision-making capacity. An EPOA can be revoked at any time, as long as you still have the mental capacity to do this.
There are two types of decision making that can be covered in an EPOA:
- Financial matters such as dealing with banks, property transactions and other financial dealings
- Personal matters (formerly called an 'Appointment of Enduring Guardian') such as where you live, your work, and other daily lifestyle decisions.
b) Appointment of Medical Treatment Decision Maker
An Appointment of a Medical Treatment Decision Maker is a document which appoints a person to authorise medical treatment and care on your behalf. The person you appoint is called your ‘Medical Treatment Decision Maker’. Decisions regarding your medical treatment and care can include authorising operations, turning off life support, medication and other types of decisions in consultation with a doctor. You are able to limit the powers of your Medical Treatment Decision Maker, if you wish.
You are also able to make a further document, called an Advance Care Directive. An Advance Care Directive sets out your binding instructions in relation to your medical treatment. Instructions may include prohibiting or allowing certain medical procedures. Generally speaking, your Medical Treatment Decision Maker and treating doctor must follow your instructions in your Advanced Care Directive.
c) General Non-Enduring Power of Attorney
A General Non-Enduring Power Attorney will authorise your Attorney to make legal and financial decisions on your behalf. As the name suggests, this type of Power of Attorney only has effect whilst you have the capacity to make financial and legal decisions and does not necessarily endure for your lifetime. Once you become incapable of managing your financial or legal affairs, this power ceases. A General Non-Enduring Power of Attorney can be useful when you wish to appoint a person to attend to specific matters on your behalf when you are unable to do so yourself (e.g. if you are going overseas). This could include managing bank accounts or property transactions.
d) Supportive Power of Attorney
A Supportive Power of Attorney allows you to appoint someone to support you in your personal, lifestyle and financial decisions. The Attorney can undertake tasks such as contacting organisations (e.g. banks, utility companies, etc.) on your behalf, and can complete financial transactions under $10,000.00 (with your consent). The Attorney’s powers will cease when you become incapable of managing your financial or legal affairs.
A Supportive Power of Attorney is useful when you wish to allow a person to support you to make important decisions, but where you don’t want to pass complete control to the Attorney.
What if I don't have a Power of Attorney?
If you do not have a Power of Attorney in place and you no longer have the capacity to appoint an Attorney, an application may be made to the Victorian Civil and Administrative Tribunal (VCAT) in Victoria. VCATcan appoint an Administrator (for financial and legal matters) and a Guardian (for personal, lifestyle and medical matters).
Applications to VCAT are usually made by a family member. Be aware that disputes can arise if family members cannot agree on the person who should make the application, and any delay in the appointment could have serious consequences for you personally and financially. Furthermore, if your family cannot decide on an appropriate Administrator and Guardian, then VCAT may appoint an independent Administrator and Guardian, such as State Trustees or the Office of the Public Advocate.
VCAT requires the person making the application to provide certain documents attesting to your incapacity, such as medical records. The person seeking to be appointed as your Administrator and Guardian will also have to give evidence before VCAT, and if appointed will have an ongoing requirement to provide VCAT with annual financial updates.
VCAT can limit the Administrator's and Guardian’s powers to make only specific types of decisions. VCAT will also regularly reassess thea dministration and guardianship orders to check if they are still appropriate to your circumstances.
The importance of making comprehensive Powers ofAttorney, whilst you still have capacity, cannot be over-emphasised. After all, the decisions that your Attorney may make will affect your future health, well-being and financial security. We recommend that you put Powers of Attorney in place earlier rather than later, whilst you still have cogntive capacity, and to prevent a situation where you have no say in how you choose to live out your life.
How Can Sharrock Pitman Legal Help?
We recommend that you seek legal advice about Powers of Attorney. A lawyer can advise on certain conditions or limitations that you may wish to include to ensure the document covers everything that is relevant in light of your personal situation and your assets. For example, specific drafting or additional documents may be required to allow your Attorney to make decisions regarding your superannuation, business, or family trust.
Our Accredited Specialist Wills & Estates team is experienced in helping business owners and their families safe-guard their estates to ensure that protections are in place for future care and well-being of the asset owners.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
Sarah is an Associate Lawyer at Sharrock Pitman Legal. As a member of our Wills and Estates team, Sarah is dedicated to successfully resolving her clients matters in a cost-effective and timely manner. For further information, please contact Sarah directly on (03) 8651 3322.