The Importance of a Power of Attorney
by Danielle Lim
A Power of Attorney is a legal document where one person can give another person authority to make personal and financial decisions on their behalf. It is, without question, one of the most important documents anyone can sign.
This article gives a high-level overview of the document itself and how it works. It also outlines some of the more common myths. At the end of the day, the most important thing is to ensure you have a power of attorney that is right for you and your circumstances.
What is a power of attorney – and what does that mean?
A Power of Attorney is an incredibly powerful legal document that allows someone else to stand in your shoes and make decisions as if they were you. Depending on the terms of your document, an attorney could sell your house, buy you a new house, deal with your bank account or even make health decisions for you.
When granting a power of attorney, there are many relevant considerations. For example, you can appoint more than one attorney and, if you do, will have to decide how they make decisions (e.g. unanimously). In addition, you can put conditions on what your attorneys are able to do, and even decide when the power of attorney becomes active – many people don’t want the power of attorney to start until the time they can’t legally make decisions for themselves.
Who should be my attorney?
The biggest and best piece of advice for anyone considering granting a power of attorney is ‘appoint someone you trust’. This may sound obvious, but you would be surprised by the number of people who appoint a person because of their role in the family (e.g. the oldest son). While in most cases, that might be fine…the risk is simply not worth it.
What if I am an attorney?
Similarly, taking on the role of attorney is not to be overlooked. Because of the potential impact, this important role carries with it serious legal responsibilities and consequences.
Also, once an attorney accepts their appointment it can be very hard to just ‘walk away’ in the future. For example, once a principal has lost mental capacity, the only way to be excused from acting as their attorney is to get an order from a Tribunal.
What are the myths?
The following list is some of the ‘myths’ about powers and attorneys and how they work:
MYTH 1. You can make a Power of Attorney anytime – False
Someone can only sign a power of attorney (or any legal document, for that matter) if they are legally competent to do so. So often, cognitive decline can occur without us noticing, and it is always better to get organised in advanced.
MYTH 2. Using a free one from the internet is no problem – False
A document as important as a power of attorney should be created specifically and uniquely for you and your unique circumstances. Also, documents that are not drafted clearly are open to legal challenge. DSL Law is up to the challenge of creating your unique powers of attorney
MYTH 3. Your attorney can do what they like with your estate – False
Attorneys must comply with very stringent legal obligations. Generally, if their actions are not in the best interests of you then they will be unlawful.
MYTH 4. There is one standard document for all Powers of Attorney – False
You should receive legal advice as to which Power of Attorney suits your specific situation. For example, in Queensland, there are General Powers of Attorney and Enduring Powers of Attorney. Powers of Attorney also come in long and short form. Also, some health matters are covered by Advanced Health Care Directives.
MYTH 5. An Enduring Power of Attorney survives death – False
All Powers of Attorney terminate on death - no matter which form was signed.
MYTH 6. I can’t find my Power of Attorney, but it’s OK because I signed it – False
While it doesn’t matter when it was signed, it does matter where it is and if it is registered. If you are exercising a power of attorney, you may be asked to produce the original, an original certified document or even register the original with the Titles Office. If you can’t locate the original document, this could make things very difficult and the safest course of action is to sign a new document.
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Once people learn what the document is, how it works and some of the myths – they might think it sounds a little too difficult. However, granting a power of attorney can be quite a simple and quick plus DSL Law makes it an affordable process too. No matter what stage of life you are at, putting a properly considered and drafted power of attorney in place now will undoubtedly save you and your family significant inconvenience, cost and frustration in the future.
For more information contact DSL Law Pty Ltd, 07 5630 6538 or visit www.dsllaw.com.au