Most people plan for what happens to their assets after they die. Far fewer plan for a time when they are alive but cannot manage their own affairs. An accident, a stroke or dementia can take away the ability to make decisions with little warning. An enduring power of attorney is one of the main legal tools for that situation.
The rules come from state and territory law, not one national Act. That means the forms, witnessing rules and limits on attorneys differ depending on where you live. This article explains the general ideas and points out some of those differences. It uses New South Wales, Victoria and Western Australia as examples.
What an enduring power of attorney does
A power of attorney is a legal document that lets you appoint someone to act for you. The person making it is often called the donor or principal. The person appointed is the attorney, who does not need to be a lawyer. In Western Australia the attorney can be a spouse, family member, close friend, accountant, lawyer, trustee company or the Public Trustee.
The word “enduring” is the key part. The NSW Government guide to powers of attorney explains that a general power of attorney works only while you can still make your own decisions. It ends if you lose capacity to manage your affairs. An enduring power of attorney keeps working even after you lose that ability.
Both types end when you die. From that point your will takes over, along with the executor named in it. That is why an enduring power of attorney sits beside a will in a sound estate plan. Leaving one out is among the common estate planning mistakes people make.
Financial decisions and personal decisions
States split decision making in different ways. In NSW an attorney can only make financial and legal decisions. Choices about accommodation, health care, lifestyle and medical treatment belong to an enduring guardian, who is appointed under a separate document. Victoria takes a different approach.
Under the Powers of Attorney Act 2014 (Vic), one enduring power of attorney can cover financial matters, personal matters or both. The Office of the Public Advocate in Victoria gives paying bills as a financial example and where you live as a personal example. You can also limit the power to specific matters. So the document you need, and how many of them, depends on your state.
What a financial attorney can do
The NSW Government lists signing binding documents, operating bank accounts and paying bills as examples. An attorney may also buy and sell real estate, manage investments and collect rent. Business owners should think about how their attorney would deal with company or trust matters. If you are thinking about restructuring your business, review your attorney appointments at the same time.
Who can make one and when it starts
You must be 18 or older and have capacity when you sign. Victoria’s Public Advocate describes capacity as being able to understand the information, retain it, weigh it up and communicate a decision. It also notes that capacity is decision specific. In Western Australia, the Office of the Public Advocate suggests getting a written opinion from a doctor if there is doubt about capacity.
Timing is flexible in many states. In Western Australia the power comes into operation from the time stated on the form. In Victoria you can choose when the powers start. Some people want it to apply straight away, while others prefer it to start only if they lose capacity.
Choosing your attorney
This is the biggest decision in the whole process. Your attorney may end up running your finances for years. Pick someone you trust who is likely to act in your best interests. The Victorian Public Advocate also suggests someone who is unlikely to die before you and who is willing, able and available.
You can usually appoint more than one attorney. In Victoria you can say whether they act jointly, severally, jointly and severally or by majority. Western Australia allows no more than two attorneys at any one time. Naming a substitute can help if your first choice cannot act.
Attorneys have legal duties. The NSW Government says an attorney must act in your best interests and avoid conflicts, such as using your money for their own benefit. They must keep accurate records and keep their money separate from yours. A good attorney will understand these duties before agreeing to take on the role.
Signing and witnessing rules
Witnessing rules are strict and they differ between states. In NSW only certain people can witness an enduring power of attorney. They include a solicitor or barrister, a Local Court registrar and a licensed conveyancer who has completed an approved course. Approved employees of NSW Trustee and Guardian or a private trustee company can also witness.
Victoria requires two adult witnesses. One must be authorised to witness affidavits or be a registered medical practitioner. Neither witness can be your relative, your care worker or your accommodation provider. A person being appointed cannot witness, and nor can their relatives. These limits help protect people from pressure by those who stand to gain.
Western Australia also requires two witnesses. One must be authorised under the Oaths, Affidavits and Statutory Declarations Act 2005 (WA), such as a Justice of the Peace or a medical practitioner. The other must be at least 18 and must not be the attorney or substitute attorney. Each state uses its own form, so check you have the right one for where you live.
Registration, moving interstate and cancelling
Registration rules differ too. In NSW registration is optional unless your attorney will deal with your NSW real estate. In that case it must be registered with NSW Land Registry Services. Western Australia has no register for these documents, but you may lodge one with Landgate if you own property, and a fee applies.
Moving states raises its own questions. The NSW Government says an enduring power of attorney made in another state or territory is recognised in NSW if it is valid where it was made. The powers must also be ones that could validly be given in NSW. One made overseas is not recognised in NSW, so people who split their time between countries should get advice.
You can change or cancel your enduring power of attorney while you still have capacity. The NSW Government recommends written notice to your attorney, your bank and other relevant organisations. Without notice, your attorney might keep making decisions for you. Separation is a common reason to revisit this, and it belongs on any list of steps to take if you and your partner separate.
What happens if there is no enduring power of attorney
If you lose capacity without one, your family may not be able to step in easily. The NSW Government notes that a court or tribunal may appoint someone to manage your finances under a financial management order. That person may not be the one you would have chosen. Making the document yourself, while you can, keeps that choice in your hands.
Couples often sort out their money planning in one go. If you are already weighing up a financial agreement with your partner, look at powers of attorney at the same time. The two documents do very different jobs. One deals with property if a relationship ends, while the other deals with decisions if you lose capacity.
Frequently asked questions
Does my attorney make medical decisions for me?
It depends on your state. In NSW an attorney can only make financial and legal decisions, and health decisions are for an enduring guardian. In Victoria one enduring power of attorney can cover personal matters as well as financial matters.
Can I appoint two people?
Usually yes. Western Australia limits you to no more than two attorneys at any one time. Victoria lets you say how several attorneys should act together.
Does my enduring power of attorney still work after I die?
No. The NSW Government says both general and enduring powers of attorney end on death. Your will then governs what happens to your estate.
Can I cancel it later?
Yes, while you still have capacity. Tell your attorney and the organisations they deal with in writing. If the document has been registered or lodged, the revocation should be registered or lodged too.
Laws on enduring powers of attorney differ between states and territories and they change over time. This article is general information only and is not legal advice. Speak with a qualified lawyer about your own circumstances.
