As we know, Australians are living longer than ever before. Whilst many of us enjoy a happy long life, as we age, we often need help in managing our affairs. Most of us are familiar with a Power of Attorney. Indeed, we are encouraged by financial planners, doctors and other advisors to have a Power of Attorney in place in case we get to a point where we can no longer manage our affairs.
Importance of a Power of Attorney
Put simply, a Power of Attorney authorises our appointed attorney/s to do, on our behalf, whatever we can do with our property and financial affairs. Limitations can be imposed but more often than not, the appointment authorises anything and everything we can do ourselves. In other words, our attorney may pay our bills, do our banking, and buy and sell our assets. It does not however, give authority for medical or accommodation matters.
Most Powers of Attorney are made on an “enduring” basis such that if capacity is lost the power nonetheless continues in force. Our attorney can be dealing with our property, business affairs etc, at a time we are not aware of what is happening.
Why you need one
On the one hand having a Power of Attorney in place has great benefits. If we become disabled, our business affairs still continue. If no Power of Attorney is in place it is too late if we loose capacity to make one. Our affairs can only then be managed by a financial manager appointed either by the NSW Supreme Court or by the NSW Civil and Administrative Tribunal (NCAT) Guardianship Division. This can be expensive and time consuming and there is no guarantee that the person appointed would be your personal choice. So, by having an appointment in place, these problems can be avoided.
The law also provides that an attorney owes a special duty to the person who appointed them unless specifically authorised by the appointer. An attorney cannot be paid for carrying out their function or receive any direct or indirect benefit for doing so. The attorney is accountable and must always act in the best interests of their appointer.
On the other hand, the fact that a Power of Attorney may be being used when the appointer has lost capacity or is disabled means that it is a matter of great trust in the person/s appointed. There are growing numbers of reports of attorneys taking the appointer’s money for their own benefit. This is often a “silent” crime as no one is aware of what is happening until the appointer dies or a change in circumstances brings this to light. More often that not the offender is a family member or close friend.
Most appointments of attorneys work well as is intended and are a great benefit to the appointer in carrying out their everyday financial affairs. However, the Government is now looking into making changes in the law to try minimise the possibility of people, particularly the elderly, from being exploited. What these changes may be will need close consideration.
What to consider
So, in the meantime if you are considering giving a Power of Attorney, keep the following in mind:
- By its nature the document will most likely being used after you become disabled or loose capacity
- Where possible, have more that one attorney so that there can be some cross checking
- If you have any concerns about a person being your attorney, don’t appoint them
- If you have any particular concerns-for example the sale of your home or assets which if sold might trigger off capital gains tax liabilities when sold, exclude these from the operation of the power,
- It is not recommended that you appoint your attorney as the executor of your will. An independent executor can require an attorney to account if there has been any apparent irregularities
- Always try and document any gift or benefit that you might give your attorney. Have some independent witness if possible. This gives a record both for you and your attorney.
- Remember that as long as you have capacity, you may revoke a Power of Attorney at any time without giving reasons. All that is required is written notice to the attorney that their power is revoked.
Action by your attorney in regard to your property may affect gifts you have made or would like to make in your will. If you have a power of attorney made before March 2004 we strongly recommend you have both the power of attorney and your will professionally reviewed.
Contact Turner Freeman
Turner Freeman have experienced specialist lawyers who can assist you in preparing your Power of Attorney and advise you on what terms might be bets suited to your needs. Call 13 43 63 to start planning your estate today.