What is a Power of Attorney?
A Power of Attorney is a legal document authorising another person to do certain things on your behalf. The person who gives the Power of Attorney is called the donor.
The person to whom the power is given is called the attorney.
How do they work?
Powers of Attorney are regulated by individual State legislations, so how they work varies slightly in each State. But generally speaking, the donor documents who the attorney is and the powers to be exercised by them.
The attorney’s powers may be:
- Widely drawn: The donor authorises them to act on their behalf in any manner.
- Narrowly drawn: The donor limits the attorney’s acts to a particular function or transaction.
The Power of Attorney commences either:
- immediately on execution (i.e. being signed and witnessed); or
- a date specified in the Power of Attorney.
Are there different types?
Yes. There are 2 basic approaches to Powers of Attorney:
- Non-enduring Power of Attorney.
- Enduring Power of Attorney.
Non-enduring Power of Attorney
A Non-enduring Power of Attorney addresses a specific event for a fixed period of time. For instance, it can be granted for the duration of your absence while overseas. Non-enduring Powers of Attorney become invalid if the donor becomes mentally incapacitated.
Enduring Power of Attorney
An Enduring Power of Attorney becomes active when the donor becomes mentally incapacitated. In this event the attorney is able to look after financial affairs on behalf of the donor while they are unable to look after it themselves.
In most States, it does not allow the attorney to make lifestyle and medical decisions for the donor. This generally needs to be addressed by appointing an Enduring Guardian or a Medical Power of Attorney.
Your solicitor can provide you more information relevant to your State, and help you execute the relevant documents.