Power of Attorney
A properly drafted and considered Power of Attorney, or Enduring Power of Attorney as well as a wider estate plan can prevent disputes and give you incredible peace of mind knowing that tomorrow is under control and well taken care of. Strong legal advice and guided, open conversations with your family and those around you are key.
How our Power of Attorney Lawyers can help you
When we meet we can discuss your unique circumstances and what or who you are looking to protect and the outcomes you’re looking for – we will then be best placed to give you the right advice and the right course of action.
- When to have an Enduring Power of Attorney in place
- Who to appoint – and the considerations to take into account
- What to do when you feel the power is being misused
- A regular Power of Attorney vs an Enduring Power of Attorney
- What a Power of Attorney covers and what it doesn’t
- The risks and traps and how best to avoid them
The power behind this legal document – what you need to know
A Power of Attorney is a document by which you appoint someone to stand in your shoes, legally speaking, and make financial and legal decisions for you. It means the person or persons you’ve appointed can use and deal with your assets for your benefit as if they were you. It gives you the opportunity to put someone in charge of your best interests and safeguard them if you’re not in a position to do so.
It is a very powerful, useful and practical document, and also clearly has the potential to be a very dangerous document if the wrong person is appointed or the wrong type of document drafted. Having expert guidance on the right person or persons appointed into this role is key. There are a number of ways it can work given your circumstances, and there are strict formalities that must be complied with for it to be valid – we can discuss these when we meet.
A Power of Attorney does not allow your ‘Attorney’ or ‘donee’ to make lifestyle or medical decisions for you – those powers are contained within separate documents, namely an Enduring Power of Guardianship and an Advance Health Directive.
We can also advise you on these and draft them for maximum protection and effect too.
Whether you’re looking to have a Power of Attorney put in place for you or someone around you, we can walk you through the process and what’s involved. Likewise if there is a Power of Attorney in place and you’d like to ensure it’s the right one, or understand more about the rights and obligations that go with it, or potentially even take action against someone you feel may be abusing their powers as a donee, simply get in touch.
Timing can be critical in getting Enduring powers of Attorney in place where someone has failing capacity issues. Do not delay when there is a risk or mental capacity slipping or if you suspect that a person is abusing their powers and dealing improperly or incompetently with a loved one’s assets or are making poor decisions on their behalf.
What is a Power of Attorney and how we can help
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What are Enduring Powers of Attorney and Enduring Powers of Guardianship?
An Enduring Power of Attorney is a very powerful document. It allows another person, nominated by you, to manage your financial affairs on your behalf. This includes things like your bank accounts and real estate. An Enduring Power of Attorney can be lodged at Landgate, but this is only necessary if your attorney needs to deal with any real estate on your behalf.
An Enduring Power of Guardianship, on the other hand, is a document that allows another person, nominated by you, to manage your health and lifestyle decisions on your behalf. These are decisions including where you will live, and what medical treatment you receive.
Both documents are only valid during your lifetime, so your attorneys and guardians will only have decision-making authority up until your death, at which point the executor of your Will steps in.
Enduring Powers of Attorney and Enduring Powers of Guardianship are very important tools, but sadly they are also some of the most exploited documents we see in our line of work. If not prepared properly, they can give someone else the power to quite literally take everything you have. This is particularly true of unrestricted Enduring Powers of Attorney, which can be used even while you still have capacity to make your own decisions.
Can I make an Enduring Power of Attorney or Enduring Power of Guardianship without also making a Will?
You certainly can. There is a whole suite of documents involved in estate planning, including Wills, Enduring Powers of Attorney, Enduring Powers of Guardianship and Advance Health Directives. We also frequently prepare Binding Death Benefit Nominations for people with Self-Managed Super Funds, and any number of tailored documents, depending on our clients’ specific estate planning needs. For convenience, these documents are often prepared together, but each are almost always capable of standing alone.
The purpose of a Will is to govern your Estate after your death, while most other documents, including an Enduring Power of Attorney and Enduring Power of Guardianship, operate during your lifetime. An Enduring Power of Attorney operates to give someone else authority over your financial and legal affairs during your lifetime, including your bank accounts, and real estate. On the other hand, an Enduring Power of Guardianship governs lifestyle and health decisions when you have lost the capacity to make those decisions yourself – this includes where you live and what medical treatment you receive. Both an Enduring Power of Attorney and an Enduring Power of Guardianship will expire on your death, and this is where your Will steps in.
Can I make an Enduring Power of Attorney or Enduring Power of Guardianship without also making a Will?
What is a Power of Attorney? What are the traps to be aware of?
A Power of Attorney is a document by which you appoint someone to stand in your shoes, legally speaking, and make financial decisions for you. It is also known as the most abused legal instrument in Australia.
A Power of Attorney, if properly made (and there are strict formalities that must be complied with as dictated by the Guardianship and Administration Act 1990 (WA)for it to be valid) means the person, or persons if you name more than one, can use deal with your assets as if they were you.
That means it is a powerful, and potentially very dangerous document. It is also an extremely useful document, and a very practical one.
It does not allow your attorney (called the donee, as you giving the power are called the donor) to make lifestyle or medical decisions for you though – those powers are contained within separate documents, namely an Enduring Power of Guardianship and an Advance Health Directive.
So that is the essence of a Power of Attorney. But it gets more complex from here. Firstly, there are two basic types – the regular Power of Attorney and the Enduring Power of Attorney.
The difference between them is that a regular Power of Attorney ceases to work immediately you lose mental capacity, for any reason, including dementia or Alzheimer’s but also if you are in an accident and, say, in a coma.
If you lose mental capacity, only an Enduring Power of Attorney will continue to work. At this point, the Enduring Power of Attorney is unable to be revoked, as you, having lost capacity, are stuck with it (unless the Guardianship and Administration Board revoke it for you, say if it is found out the donee is using your assets for their own benefit).
But within those two types there are also variations. You can make either a regular or Enduring Power of Attorney that is unrestricted, that is it applies to anything and everything you have, or it can be conditional. It is not uncommon for someone to make a restricted Power of Attorney for instance that only covers one specifically named bank account, such as if you are travelling overseas and need your spouse or business partner or someone you trust to access it when you can’t.
Another variation is one where it only becomes operable if you are declared incapable due to lack of mental capacity (for which you need a declaration you have lost capacity by the Guardianship and Administration Board).
Unless it is the type that requires a declaration by the Guardianship and Administration Board for it to work, it is a private document; there is no register in WA and no oversight by anyone else or anybody such as the Board. And it is for this reason that it is potentially a very dangerous document.
If you appoint the wrong person, then it is a licence for them to deal with your assets when you are not looking. It can be used to clean out bank accounts, transfer real estate, sell businesses and shares, set up new bank accounts, potentially change your beneficiaries in your Super Fund, and siphon all your assets away.
For this reason, who you appoint is of utmost importance. It is not a document to be given lightly, and those who are given the power need to understand that if they misuse the assets of someone else it is fraud or just plain stealing and potentially criminal sanctions apply.
This risk does not seem to matter, if the amount of abuse of these instruments is anything to go by.
We see, often enough for it to be not unusual, abuse occurring where an elderly person has given the power to one of their children, and then the elderly donor has lost capacity. At this point the Enduring Power of Attorney cannot be revoked.
The temptation of the donee in this case is to start helping themselves to the assets of the elderly parent. It usually starts small, just using mum’s credit card to buy little extras for themselves, or using the key card to take a few hundred dollars extra from the ATM to pay for groceries, fuel and the like.
But it usually doesn’t stop there, and like a bad habit, gets worse until thousands, sometimes hundreds of thousands of dollars have been silently transferred out of the donor’s hands, with no one else knowing. This practice is so disturbingly common that it has even been given its own name – ‘strip mining’.
There many myths that have sprung up around Powers of Attorney.
We often hear people tell me that as they are the donee for example of their elderly mother’s Power of Attorney, that mum’s Will doesn’t matter, and that they will just start carving up mum’s assets now as if mum is already dead. This is the most disturbing myth of all; that just because a person has been entrusted to be the donee that they now have carte blanche to treat the assets as if they were theirs.
This cannot be further from the truth; a donee is entrusted to treat the assets only in the interests of the donor. That does not mean strip mining a vulnerable person of their assets and leaving them destitute, no matter how the donee might rationalise their behaviour.
Another myth is that the donee of the Power of Attorney is also going to be the executor of the donor’s Will. The two do not intersect and there is no relationship between them at all.
A Power of Attorney only works when the donor is alive. The minute they have died the Power of Attorney ceases to be effective, it evaporates, so to speak. It is nothing except a piece of paper at that point. An Enduring Power of Attorney is no different.
A Will is the reverse, in that during a person’s life it is just a piece of paper, that can be changed a thousand times before death if the person wishes, but once they have died it crystallises, and is then set in stone and cannot be varied except by a complex process resulting in an order of the Court.
Whilst sometimes a person makes the same person their Power of Attorney and Executor of their Will (quite usual for spouses, for instance) they are two completely separate and unique documents. Often there is good reason to appoint a different person as your Executor than the donee of your Power of Attorney.
For instance, we once wrote a Will for a client who knew their daughter was a bad donee of her Power of Attorney, and had helped herself to thousands of dollars from her mother’s bank account, but did not have the strength or courage to confront her. Her idea was that on her death, her accountant would be her executor and would then go after her daughter to try and recover the money stolen. A risky strategy, but we understood the incredible emotional difficulty of our elderly client in confronting an overbearing and violent child in her dying days.
Another myth is that once you give a Power of Attorney the donee has effectively given away their rights to make decisions. This is a surprisingly common belief; that once you give a power of attorney you have effectively signed away your own ability to make any decisions yourself. This is nonsense, unless it is an Enduring Power of Attorney and you have lost mental capacity.
A donee must work with you and for you, for your own interests at all times – they do not supplant or overtake you. If you have lost mental capacity, then you can no longer write a new power of attorney, but the Guardianship and Administration Board can review your appointment and replace them if they think they are not operating for your best interests or within the law.
Finally, all of these risks can be accommodated. The big question in making a Power of Attorney, whether it be Enduring or regular, unrestricted or limited, to one person or to three, is who you appoint.
It must be someone you trust implicitly, who will always do the right thing, act only in your best interests and not their own, and who will be ruthlessly honest and upright at all times and be able to resist temptation. Fail to appoint such a person and the risk is high indeed.
If in doubt, talk to us about the sort of Power of Attorney you need, and how it may affect you; and never be bullied into making one to someone you do not trust with your financial welfare.
Book your free 15 min consultation
Discussing your situation over the phone is often the best way to start, and we’re pleased to offer all new and existing clients a free 15 minute phone consultation for every new matter. It’s a great opportunity to let us know more about the assistance you’re looking for, clarify your situation and walk you through how best we can help and what’s involved.