Although not on the top of everyone's priority list, it's important to plan ahead for unexpected things that may impact how you manage your finances. In this article Financial Adviser Tim Hughes from Mine Super Financial Advice discusses how appointing an Enduring Power of Attorney is one of the best ways to prepare. “An attorney can look after your affairs if you're unable to. This doesn't always have to be when you're unable to make decisions yourself due to health reasons. A Power of Attorney can also be activated if you're living overseas and need someone to look after your interests in Australia. Having the right document in place can avoid conflict and stress for your loved ones and ensures you're in control of who makes decisions on your behalf,” explained Tim.
An Enduring Power of Attorney is a legal agreement where you nominate a person or trustee to manage your assets and financial affairs in case you're unable to do so. It remains valid during your lifetime, even if you lose the capacity to make your own decisions. Tim highlights that it shouldn't be confused with a General Power of Attorney which becomes invalid if you lose the mental capacity to make your own decisions. Both a General and Enduring Power of Attorney become invalid upon death. You can revoke a Power of Attorney at any time, as long as you understand the implications.
Depending on the wording of the document, an Enduring Power of Attorney may be able to be activated in certain situations, such as when you're travelling for an extended period or living overseas, or if you lose the ability to make your own decisions through an illness or accident. “In most states and territories, an Enduring Power of Attorney is limited to financial and legal decisions, such as paying medical and household bills. You may also want to consider appointing a guardian and having a medical care plan in place outlining your medical wishes if you're unable to make these decisions yourself,” explained Tim.
You can nominate one or more people as your attorney, such as your spouse, relative, close friend or solicitor. Tim said, “You can limit how they carry out their responsibilities or place conditions on the decisions they can make. For example, you can prevent them from selling your home. It’s important you choose someone you can trust and who has the skills and capabilities to manage your finances and act in your best interests.”
According to Tim, most states and territories have standard Power of Attorney forms that you can complete in order to appoint an attorney. “But I always advise people to seek professional legal advice before appointing an attorney as a Power of Attorney is a very important document,” he added.
“It’s also important to understand that if someone has not appointed an attorney under an Enduring Power of Attorney and they lose capacity, an attorney appointed under a General Power of Attorney will not be able to act for them. An application then has to be made to the relevant state tribunal to appoint someone to make decisions for them. This process can add unnecessary stress to your loved ones,” finished Tim.
ExampleWhile Gary had a will, he didn't think it was really necessary to appoint an Enduring Power of Attorney. Unexpectantly, Gary suffered a serious brain injury after a motorbike accident and was no longer able to make his own financial decisions. Because Gary didn't appoint an Enduring Power of Attorney, the New South Wales Protective Commissioner was appointed to manage his financial affairs. As such, Gary’s family has little control over Gary’s finances. They're only given money when needed and can't maintain their previous lifestyle. |
For more information about an Enduring Power of Attorney, check out Australia.gov.au.
Tim Hughes and the team at Mine Super Financial Advice are here to provide the help you need to make confident and informed financial decisions. Meet the team or request an appointment with Mine Super Financial Advice.
This article does not constitute legal advice. Before taking action, you should consider your personal circumstances and professional advice.
A version of this article was first published in September 2020.