In many instances, third parties (including your family) are unable to make financial or legal decisions on your behalf without a Power of Attorney.
What exactly is a Power of Attorney? In this blog, we describe the various types of Power of Attorney in Western Australia, and how they can make your life easier.
If you want to find out which type of Power of Attorney is best for you, our team at Solomon Hollett Lawyers Perth are ready to assist. We know how important the certainty of knowing your financial affairs and family are taken care of in uncertain times.
What is Power of Attorney?
A Power of Attorney is a legal document that appoints one or more persons to act on your behalf.
The person(s) appointed to act on your behalf are known as the “attorney”, although that doesn’t necessarily (and in most cases does not) mean that the attorney is a lawyer.
The person who makes a power of attorney is known as the “Principal” or “Donor” and can appoint an attorney to make any decisions on their behalf (an unrestricted appointment) or only certain, specified decisions (a limited appointment).
An attorney can make decisions as agent for the Principal/Donor regarding their legal, property and financial affairs. Because the Attorney has the authority to bind the Principal/Donor, it is important that the person appointed as attorney acts in their best interests.
Why a Power of Attorney is so important
A Power of Attorney is an important legal document recognised by financial and government institutions.
A Power of Attorney is important because it allows people to appoint persons to act in their best interests when they are unable to do so – such as when they are overseas or medically incapacitated. For example, an attorney has the power to operate bank accounts, sign contracts, engage agents and sell property.
Types of Power of Attorney
There are two main types of Power of Attorney in Western Australia and it is important that you appreciate the distinction before putting them in place.
1. Ordinary (general) Power of Attorney
An ordinary or general Power of Attorney appoints an attorney for a specified purpose or period of time. A general Power of Attorney is ideal when someone knows that they will be unable to make any decisions within a given timeframe – for example, if they were going in for surgery or travelling overseas. An ordinary Power of Attorney is useful when someone needs to appoint someone to manage all of their affairs. A limited general Power of Attorney is a general Power of Attorney which only grants limited powers to the attorney. This is useful where a Donor wants their Attorney to make some, but not all decisions on their behalf.
However, where a donor loses mental capacity – for example by falling into a coma – any ordinary, general Power of Attorney they have made will automatically cease to operate. It is only where a Power of Attorney is an Enduring Power of Attorney that it will continue to operate when the donor has lost capacity.
2. Enduring Power of Attorney
An Enduring Power of Attorney enables an attorney to make decisions and does not cease to operate if the Principal loses mental capacity (i.e. develops Alzheimer’s or dementia).
An Enduring Power of Attorney ‘endures’ through loss of capacity and is very useful when there is a need for a broad, ongoing delegation of decision-making to another person. Like a general Power of Attorney, an Enduring Power of Attorney can be made in respect of all decisions that the donor could make, or it can be limited to certain decisions or property.
Naturally, it’s essential that an Enduring Power of Attorney is made before mental capacity is lost.
What does “having capacity” mean?
Having legal capacity is an important term that will come up a lot when you speak to lawyers about making or using a Power of Attorney. Mental capacity is a complex idea but in short is it your ability to:
- Understand basic facts
- Comprehend the choices available to you
- Consider and evaluate the consequences of the available choices
- Understand how the available choices will affect you and others around you
- Communicate your decision.
It is possible to make an Enduring Power of Attorney that comes into effect immediately upon signing and also for it to be dormant. If the Enduring Power of Attorney is dormant then only once someone has lost capacity (e.g. from a condition like dementia or because of a serious accident) and the State Administrative Tribunal has made a declaration that the person has lost capacity, does the Enduring Power of Attorney come into force.
Who can you appoint as a Power of Attorney?
You may well ask – who can I appoint as my attorney? As a basic rule, you can appoint anyone who is over 18 years of age who you know well and trust.
Here are some examples of people you could appoint:
- Understand basic facts
- Comprehend the choices available to you
- Consider and evaluate the consequences of the available choices
- Understand how the available choices will affect you and others around you
- Communicate your decision.
How to make a Power of Attorney?
Making a general Power of Attorney involves completing a document which specifies:
- Who your power of attorney will be;
- What decisions they may take for you (for example any decisions you could make, or only financial decisions);
- What decisions they cannot take on your behalf; and
- Any limits on the power.
When appointing an Enduring Power of Attorney, you will need to fill out a similar document and specify when the document comes into effect. The document must be signed in front of a qualified witness such as a lawyer or pharmacist. It’s important that the donee also signs the form.
The Power of Attorney can be given to your bank and registered at Landgate – so that they are aware of who may be making decisions on your behalf. It’s good practice to keep a list of institutions that have received official notification of your Power of Attorney.
It is important to remember that the Guardianship and Administration Act 1990 (WA) specifies the form that an Enduring Power of Attorney must take, which is overlaid by other institutions’ requirements, like Landgate, so it is imperative that you get it right, especially when real estate is involved.
How to cancel a Power of Attorney?
It is possible to cancel any previously established Power of Attorney – as long as you have the mental capacity to do so. No one else (other than the State Administrative Tribunal) can cancel your Power of Attorney on your behalf.
A formal letter revoking a Power of Attorney must be sent to your attorney informing them of the revocation – and likewise, any institution that was informed about the original Power of Attorney should also be notified of the revocation.
Donors of an Enduring Power of Attorney that have registered their Enduring Power of Attorney with Landgate will have to execute a Deed of Revocation, and lodge it with Landgate to evidence the revocation. Remember – you can have multiple concurrent Enduring Powers of Attorney running at the same time – they are not automatically revoked by signing a new one – so make sure any revocation clearly specifies which Power of Attorney it is revoking.
Seek legal advice
Making a Power of Attorney should be a carefully considered process. It’s important that you consult with an experienced lawyer before you make a Power of Attorney, no matter the circumstances. Solomon Hollett Lawyers understand the importance of ensuring your choices are made in the right way – with the result you intended. Get in contact with our team of lawyers in Perth and book a free 15 minute consultation today.
