Power of attorney
If you’re wondering if it’s time to appoint a power of attorney, or you’ve been appointed a power of attorney yourself, it’s helpful knowing the differing types of power of attorney and what each role could involve.
Essentially, a power of attorney is someone you give permission to make legal, financial and medical decisions on your behalf.
You might do this temporarily; for example, if you decide to move overseas for a year, you might appoint a power of attorney to look after your home while it’s rented out.
Or, you might do it for the long haul; that is, you might appoint a power of attorney who can take care of your affairs, should anything unfortunate happen to you that causes you to lose mental capacity permanently. In this case, a power of attorney can help make sure that your wishes are followed, whether you want your children to be cared for in a particular way or you want your savings managed according to a specified plan.
Appointing a power of attorney is usually one element in the bigger picture of forward planning, which may also include writing (or reviewing) your will, and reviewing your life insurance policy to help make sure your loved ones will be looked after financially if you were to pass away. This may also include looking at ways you can help cover you and your family day-to-day, with income protection helping to cover your income if you’re injured or sick and unable to work.
General power of attorney vs enduring power of attorney
Chances are you’ve heard of two types of power of attorney: general power of attorney and enduring power of attorney.
If you make someone your general power of attorney, then you temporarily allow them to make decisions for you—usually for a specified length of time and/or a specified reason.
There’s a bunch of reasons why you might appoint a general power of attorney. If you were in hospital for an extended period you might want someone to manage your bills or take care of a specific aspect of your finances, you could be planning a long trip and need someone to manage the sale of a property on your behalf, or you might want someone with more experience to take over the management of your finances.
It’s important to note that you can only appoint a general power of attorney while you have mental capacity. If you lose mental capacity, your general power of attorney will automatically lose their powers to make decisions on your behalf.
In contrast, by making someone your enduring power of attorney, you give them permission to make decisions for you, if, and only if, you lose mental capacity. This loss may be temporary or permanent.
If you regain your mental capacity, then your enduring power of attorney loses their power. A power of attorney only stands while you’re alive — which means your will can’t be influenced by your enduring power of attorney.
How much power does a power of attorney have?
This will depend on whether they are a general or enduring power of attorney. You can make it clear in the documentation where their power starts and stops and can cancel a power of attorney at any time, as long as you have the mental capacity to do so. When making someone your general power of attorney, you can state which powers you want that person to have. For example, if you want someone to look after a particular asset for you, you could limit their powers to relevant decisions.
An enduring power of attorney tends to have more wide-ranging powers. That’s because, if you lose mental capacity, then many decisions may need to be made on your behalf, such as those involved with managing your finances, selling your property and/or negotiating contracts with health care providers.
Power of attorney: your health, medical care and lifestyle
The laws concerning powers of attorney are different from one state to another. In some states, powers of attorney may be given permission to make decisions concerning your health, medical care and lifestyle; in other states, this may not be the case. Every state has their own website where you can find the right information for you - NSW, QLD, WA, TAS, VIC, NT, SA.
A lawyer with expertise in powers of attorney should also be able to help with providing advice about general powers of attorney and enduring powers of attorney in your state.
Asking someone to be your power of attorney
Given that a power of attorney can have a lot of power, it can be important to think carefully before deciding who to ask — whether you’re choosing a general power of attorney or an enduring power of attorney. Many people appoint a trustworthy relative, close friend or long-term partner that they feel confident will act in their best interests, as there’s no specific qualifications required.
As well as choosing a power of attorney, it’s also possible to choose a supplementary power of attorney. This means that, if something happens to your first power of attorney which means they’re no longer able to make decisions for you, your supplementary power of attorney can take over.
How can you appoint an enduring power of attorney?
The minimum age for appointing an enduring power of attorney is 18. On top of that, appointing an enduring power of attorney can only be done by someone who has the mental capacity to comprehend the importance and meaning of their decision.
The process for appointing an enduring power of attorney usually involves:
- your signing of an enduring power of attorney document while witnessed by someone with appropriate legal qualifications, such as a lawyer, licensed conveyancer or employee of the state’s public trustee (you can find these details by visiting your specific state’s website shared above);
- your enduring power of attorney signing the same document, also while witnessed; and
- the witness’s signing of a document which establishes that the witness has explained what appointing an enduring power of attorney means and is confident you understood the explanation.
Putting protections in place for your future isn’t only about appointing a power of attorney to make decisions on your behalf. To help look after your family’s future you may want to consider having life insurance which can help minimise the financial burden on your loved ones in the unfortunate event of your death, or the diagnosis of a terminal illness.
- Tips for your life insurance application
- Why do you and your family need life insurance?
- What is income protection insurance?
AAMI Life Insurance products, other than in some circumstances the Redundancy Benefit, is provided by TAL Life Limited ABN 70 050 109 450 AFSL 237848 (TAL Life) which is part of the TAL Dai-ichi Life Australia Pty Limited ABN 97 150 070 483 group of companies (TAL). TAL is not part of the Suncorp Group. TAL uses the AAMI brand under licence from the Suncorp Group. Any advice on this page in connection with the Life products is general in nature and is provided by Platform Ventures Pty Ltd ABN 35 626 745 177 AFS Representative Number 001266101 (PV). PV is part of the Suncorp Group and an authorised representative of TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260 (TAL Direct). General advice does not take into account your individual needs, objectives or financial situation. Before you decide to buy or to continue to hold a Life Products you must read the relevant Product Disclosure Statement. The Target Market Determination (TMD) for the product is available on our website.