There may come a time when you need to authorise someone to make decisions for you because you’re not in a position to do it yourself.
It might be for something as simple as giving someone the authority to pay your bills while you’re travelling overseas, or you may need someone to make financial and legal decisions for you in the long term because you aren’t capable of making important decisions any longer.
A power of attorney (POA) is the document you’ll need to make that happen.
It is a legal document that appoints someone to conduct another person’s financial, legal or personal affairs. Powers of attorney operate when the principal is alive and wants or needs someone to make decisions on their behalf. When the principal dies the attorney stops having any power.
The rules for setting up and administering a power of attorney differ from state to state, so check out your state or territory government’s website for more information.
To create a power of attorney, you need to be over 18 and able to show you have the capacity to understand what you’re signing and what powers you’re giving to your attorney.
If you’re going to be out of communication for a while, you might want to consider establishing a general power of attorney. It authorises someone to make financial and legal decisions for you, but usually only for a specified time. Say, for example, you’re going to settle on a property but you’re overseas and not contactable, your general power of attorney can work for you in this instance.
Importantly, general powers of attorney become invalid if you lose the mental capacity to make your own decisions.
When will you need one?
This is where you need an enduring power of attorney. This is a document you can set up at a time when you have the capacity to understand what you’re doing, authorising a person or a group of people to manage things for you when you don’t have the capacity to make decisions anymore.
You can specify what powers or limits your attorneys will have, but the document doesn’t cover all aspects of your life. An enduring power of attorney allows the person to make your legal and financial decisions. You will also need to consider creating an enduring guardian and an advance care directive to cover all the decisions you might be facing. I will be writing about both of these in coming months.
Making someone your power of attorney is giving them a lot of responsibility. It’s important to carefully consider who you appoint as they’re in a position of trust and responsibility. Discuss your intentions with them first as you need to make sure they have the time and ability to take on the role, and they need to agree to be your power of attorney.
If you’re thinking about setting up a power of attorney, talk to your solicitor or your state or territory Public Trustee.
Have you set up a power of attorney? What prompted your decision? Why not share your experience in the comments section below?
Also read: Explained: online will kits
