In NSW, a Power of Attorney is a legal document that allows you to appoint a person to make financial decisions on your behalf and manage your assets and property. This person is called the ‘attorney’.
This document authorises your attorney to deal with your assets and property, including:
- access your bank accounts and set up or cancel direct debits;
- buy and sell shares;
- sell personal belongings;
- sell, lease or mortgage real estate; and
- access your private financial information.
You can also specify additional powers you wish your attorney to have, which may include powers to:
- make, vary or renew a superannuation binding death nomination;
- make provision for a spouse or dependent for reasonable medical and living expenses; and
- receive payment or compensation for acting as your attorney.
In NSW, an attorney cannot make medical or lifestyle decisions, which requires an Enduring Guardian.
An ‘Enduring’ Power of attorney differs to a ‘General’ Power of Attorney. The documents are similar, however a General Power of Attorney terminates if you lose decision-making capacity whereas an Enduring Power of Attorney continues to operate even if you lose capacity. You can execute an Enduring Power of Attorney that only starts once a medical practitioner has confirmed that you have lost capacity to manage your own finances, at which point the attorney is authorised to take over.
You should appoint a person or persons you trust to act in your best interests. If you appoint more than one attorney, you can appoint them to act ‘jointly’ where they must make all decisions together or ‘jointly and severally’ where the attorneys can act independently and only one is required for authorisation.
A person can temporarily or permanently lose decision-making capacity at any time due to illness, injury, brain damage or dementia. It is therefore important to create an Enduring Power of Attorney when you are of sound mind. If you do not have an Enduring Power of Attorney and have lost the capacity to manage your own finances and property, a family member, friend or interested party may apply to the NSW Civil and Administrative Tribunal for a financial manager to be appointed.
The Tribunal decides who to appoint as your financial manager. This is not ideal as the application process to the Tribunal can take a few months and the Tribunal may appoint a person you would not have chosen. The appointment is usually only for a limited time, which may result in your family members or friends needing to reapply to the Tribunal every year or so to be reappointed. If the Tribunal decides that a suitable person is not available, they may appoint the NSW Trustee and Guardian as your financial manager. The NSW Trustee and Guardian charge fees for acting in this role and one or more government employees will make decisions in relation to how your property is managed and how your finances are utilised in your best interests.
Each State and Territory has different requirements in relation to Powers of Attorney. For example, in ACT the Enduring Power of Attorney allows you to appoint an attorney to make financial and medical decisions on your behalf. In NSW, the two roles are separated with the guardian appointed under the Enduring Guardian restricted to making medical and lifestyle decisions, and the attorney appointed under the Enduring Power of Attorney restricted to making legal and financial decisions.
While different States may recognise Enduring Powers of Attorney made in other jurisdictions, it is common to prepare Enduring Powers of Attorney documents for each State that you own property in or commonly reside in. This can sometimes be easier and more cost effective than registering an Enduring Power of Attorney from one State into another State. If you live between States, own property in multiple States, or are moving to a new State, we recommend seeking legal advice to see how this may affect your Enduring Power of Attorney.