An Enduring Power of Attorney is one of the most important documents you can make in your lifetime. Everyone, no matter your age, should have one in place. However, it is important to understand if you are appointed as someone’s Attorney, that although it can be an honour, it can be quite an onerous and complex role. It is imperative that you understand what you will be taking on before you say “yes” and accept your appointment, explains Attwood Marshall Lawyers Wills and Estates Partner, Angela Harry.
What is an Enduring Power of Attorney?
When someone asks you to act as their Enduring Power of Attorney, ultimately, they are asking you to step in their shoes and make decisions about their personal life, health, and financial affairs if they are no longer able to make those decisions for themselves. This can happen due to an injury or illness which causes them to lose mental capacity (e.g. suffering a head injury, having a stroke or the onset of dementia).
An Enduring Power of Attorney document needs to be completed and signed by the person who is appointing the attorney to act for them. There is legislation and prescribed forms that must be used and properly signed and witnessed in most states and territories in Australia. This document must be signed BEFORE the person loses capacity. For example, the QLD Power of Attorney Act 1988 sets out the requirements for Enduring Power of Attorney documents and the prescribed form can be downloaded from the government website.
Enduring Powers of Attorney are different in the sense that they ‘endure’ after the person loses capacity. A normal power of attorney document ceases to be effective if the person giving it loses capacity. Some Enduring Powers of Attorney commence immediately after they are signed. Others only come into operation if the person loses capacity. Which one of these you choose depends upon your circumstances.
As an Attorney, it is your duty to protect the person’s rights and best interests. Every decision that you make should consider that person’s views and wishes.
You can be appointed to make decisions about:
- Personal (including health) matters; and/or
- Financial matters.
Personal matters may relate to decisions about the care and welfare of the person including where they live, what support services they receive, their social life, and what medical treatments or procedures they receive, including when they are nearing the end of their life.
Financial matters may include decisions about finance or property affairs, paying bills, investments, buying or selling property, or carrying on a business. It also relates to filing tax returns and superannuation.
You may be appointed to act solely, or jointly alongside other Attorneys.
In every decision you make as an Attorney, you will need to consider:
- How to protect the health, wellbeing, and safety of the person
- Respecting the person’s culture and religious beliefs
- Helping the person remain independent whilst tending to their needs
- Ensuring their financial position does not deteriorate
What will be asked of you
As an Enduring Power of Attorney, you must act honestly and diligently to safeguard the best interests of the person who you are acting for.
Certain terms and instructions will be set out in an Enduring Power of Attorney document which will help guide you in your role to ensure the decisions you make align with the wishes of the person who has appointed you.
Keep in mind that everyone’s circumstances are unique. Some people have more complicated affairs, businesses, or family structures to consider and if you accept the role of Attorney, you will need to be able to competently complete all the tasks that are required of you.
It is important to note that someone cannot appoint you as their Enduring Power of Attorney without your knowledge. In order to appoint someone as an Attorney, that person will need to sign an acceptance. It is always recommended that people have open and honest conversations about the role, what types of decisions might need to be made, and the duties being taken on before accepting the position.
Once a person loses capacity, if you have accepted the role of their Attorney, you cannot resign from that role. The only way you can resign is by applying to Queensland Civil and Administrative Tribunal (QCAT) or New South Wales Civil and Administrative Tribunal (NCAT) or through the Court.
We have seen in many cases where people take on the role and only once the Attorney has already begun their duties and realized how difficult the role is, that they want to step down. It is not as simple as just signing a form, you need to go through the legal process to resign.
Skills, Competency, Locality, Availability – There’s a lot to consider!
If you have been appointed as someone’s Attorney, it means they find you to be a trustworthy and competent individual; however, there is more involved than simply being trustworthy.
If you have been given the power to make financial decisions on someone else’s behalf, you will need a certain level of experience to be able to manage money effectively. You will have a strict duty to act in the person’s best interest when managing their money and property.
Some of the tasks you may need to complete include:
- Keeping accurate records of financial and legal transactions
- Ensuring the person’s property is kept separate
- Obtaining financial planning or taxation advice if there are significant or complex assets
- Invest only where authorized to do so and review investments regularly
- Never disclose any confidential information unless authorized to do so
- Avoid conflict transactions
- Provide for the needs of any dependants.
When it comes to financial matters, if someone is not financially savvy and does not display the ability to be able to manage money properly, it could be serious cause for concern. As an Attorney, you are liable for someone else’s tax and regulatory responsibilities and there is potential for significant penalties to be imposed on you if you get it wrong.
When someone is appointed as an Attorney to make decisions about personal and health related matters, this requires the ability to stay calm in a crisis and have confidence to speak up on the person’s behalf.
You can be called on to talk to doctors, lawyers, or other advisers. Therefore, having the ability to communicate confidently, be strong-willed, and effectively liaise with all stakeholders is integral. You need to be comfortable making personal and sensitive decisions for someone else in relation to their health and wellbeing.
Location is also a key factor to consider. If someone wants to appoint an Attorney who lives overseas, or even interstate, the logistics of that need to be considered and may be unsuitable.
There can be a lot of running around involved when performing the duties of an Attorney. Whether it is making big decisions like selling the family home, determining where someone is going to live, or smaller tasks like paying bills, going to Medicare, or arranging refunds, there can be a need for you to be readily available in person to tend to these tasks. For anyone who is not in close proximity to the person, and their property or relevant institutions, it can be very difficult to make arrangements or sign relevant documents.
Being an Enduring Power of Attorney can take up a substantial amount of your time. If you work full-time, have young children, or other commitments that already take up most of your time, perhaps the role may not be suitable for you. As an Enduring Power of Attorney, you need to be able to give your time to the role to be able to fulfil your duties effectively, which is something you need to consider before accepting the role.
Understanding complex assets
Lots of people today have self-managed superannuation funds. Everyone who has a self-managed superannuation fund should have an Enduring Power of Attorney; the reason being that if you lose capacity then you cannot act as trustee of the fund, whether that is a trustee individually or a director of the trustee company. If you lose capacity, for your fund to remain compliant, there needs to be an Attorney who can step in and undertake the role effective immediately.
What is really important for those who are stepping in and undertaking the role of Attorney, is that you are not just acting as Attorney or agent when it comes to self-managed superannuation fund; it also involves removing the individual who has lost capacity and being appointed as the director or trustee as an individual. This means you are subject to the penalties that come with the role.
Anyone who is looking at taking on the role of an Attorney should determine if the person has a self-managed superannuation fund and ultimately determine if this is something they are willing to, or capable of, taking on.
The importance of having an Enduring Power of Attorney (EPOA) in place
There is an assumption that an Enduring Power of Attorney is only for the elderly. There are many common misconceptions around these documents, including some people seeing the document as taking away their freedom, or having concerns that their Attorney will come and take away their control. This is simply not the case, especially when you appoint someone who is suitable for the role and who you trust implicitly.
For anyone who does not have an Enduring Power of Attorney in place, the risk is if the unexpected happens and you lose capacity, the right to make decisions for you is not automatically given to your family or loved ones.
Where there is no EPOA in place, your family, or a friend, would need to apply to the Queensland Civil and Administrative Tribunal (QCAT) or New South Wales Civil and Administrative Tribunal (NCAT) to be appointed as your Administrator to make financial decisions, and/or your Guardian to make personal and health-related decisions on your behalf.
QCAT or NCAT may also decide to appoint The Public Trustee to manage your affairs.
Important! If you have appointed your spouse as your Attorney and have since separated or divorced, it is imperative to understand that separation or divorce will not affect the validity of an Enduring Power of Attorney. An Enduring Power of Attorney must be revoked and replaced with a new one immediately following separation and/or divorce.
What happens if someone does not have anyone suitable in their life to appoint as their Attorney?
If someone does not have anyone they trust or feel comfortable appointing as their Attorney, there are alternative options available, such as nominating a professional adviser. If you are appointing a professional to the role, you will need to factor in the fees that will apply.
There are some cases where appointing a professional is the most appropriate solution, particularly if you have complex financial affairs and you want to make sure that your affairs are managed the way that you intend if you lose capacity.
Attwood Marshall Lawyers – we want you to have peace of mind
Our experienced team of estate planning lawyers understand exactly what is required to execute Enduring Power of Attorney documents. It is imperative to ensure that there is no ambiguity within these documents to reduce the risk of any disputes or arguments arising come the time the document comes into effect.
As a leading estate planning law firm, Attwood Marshall Lawyers takes a holistic approach to estate planning and our team practice exclusively in this area of law.
If you need any assistance drafting an Enduring Power of Attorney, or revoking an Enduring Power of attorney, we are ready to help you. Contact Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, mobile 0423 772 555, email firstname.lastname@example.org or free call 1800 621 071 at any time.
Enduring Power of Attorney – one of the most crucial and powerful documents you can create in your lifetime