People use Powers of Attorney to appoint one of more people to manage their financial affairs.
A General Power of Attorney enables a principal or donor to appoint an attorney to manage their financial affairs on the happening of certain events and subject to any conditions listed in the document.
An Enduring Power of Attorney is one that continues to be in place or “endures” beyond any subsequent loss of capacity of the donor.
An Attorney under an Enduring Power of Attorney must, during any period of legal incapacity of the donor, exercise their powers as attorney with “reasonable diligence to protect the interest of the donor and if he fails to do so, should be liable to compensate the donor for loss occasioned by the failure”.
Seems clear enough? What about the reality of circumstances for most people? It is not that clear cut. For example, if a person wants to appoint their spouse as their attorney, the spouse might be prevented from providing financial support to him or herself and the children (often in a way intended by the donor and consistent with how they had managed their affairs prior to any loss of capacity). A spouse might be prevented from providing financial support to dependent children as being inconsistent with the general duties of an attorney.
Many people creating a Power of Attorney may intend their attorney to have the ability to provide financial assistance to others, including the attorney in what can be deemed to be a “conflict transaction”. These types of powers need to be specifically considered and dealt with in a Power of Attorney document so as to ensure that dependents are not adversely affected.
Power of Attorney documents should never be a “tick and flick” type document and the powers conferred should always be carefully considered.
Other provisions and powers that might be desired include the ability to make or revoke or renew a superannuation binding death benefit nomination, requirements to have financial affairs audited annually, ability to reside in the donor’s home, to make loans and so on.
A Power of Attorney is just as important as a Will.
For further information, please do not hesitate to contact us.
This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.