A ‘Power of Attorney’ is a document you can sign to appoint another person (called your attorney) to act for you in relation to financial affairs. The document states what the attorney is authorised to do. This can be quite narrow and specific or as general as you wish. Any lawful action taken by the attorney under the power of attorney is binding on you, so it is important to appoint someone you can trust.
The person you appoint should be someone you trust. He or she must be 18 years or over. If you have no one like this, the NSW Trustee or private trustee companies can be appointed as your attorney.
When the power of attorney is signed, the document can be given to the attorney, or you can hold onto it until the need arises. Even though you have appointed an attorney, you can still personally carry out any transactions, such as banking and the sale of property, while you retain the ability to do so.
If , at the time of giving the power of attorney, you want the authority you give the attorney to continue even if you lose the capacity to make your own decisions, you need to sign a document called an ‘enduring power of attorney’. An enduring power of attorney must be made when you are of sound mind. The current form on which a power of attorney is made requires you to decide the powers you want your attorney to have to use your money for the attorney’s benefit, for the benefit of other people or to make gifts. If you want your attorney to be able to sell or deal with real estate on your behalf, the power of attorney must be registered with the Department of Lands. It is also a good idea to register the power of attorney if you want your attorney to be able to sell or deal with shares on your behalf, as some brokers or companies may require this.
What is the difference between a ‘general’ power of attorney and an ‘enduring’ power of attorney?
A general power of attorney ceases to have effect after you lose the mental capacity to make financial decisions. An enduring power of attorney will continue even after you lose mental capacity. The power of attorney acts as a substitute decision maker during your lifetime on financial and legal matters. If it is an enduring power of attorney, that must been explained to you by a prescribed person, such as a lawyer and they sign the prescribed document. This means if you subsequently lose capacity the power of attorney will continue to operate.