Protecting your interests
A power of attorney is a legal document that allows you to nominate someone you trust to make financial decisions on your behalf if you are unable to do so.
A popular misconception is that a person’s partner can make financial decisions for them and manage their assets. However, unless a formal power of attorney has been granted, these decisions may revert to a government agency instead. Having a power of attorney in place means you can nominate the person you want to make the decisions — it protects your interests.
Depending on state and territory laws, as well as your circumstances, a power of attorney can operate in different ways:
- A general power of attorney allows someone to make financial and property decisions on your behalf for a limited time only, for example, if you are overseas for an extended amount of time.
- An enduring power of attorney is the most common form and allows you to nominate someone you trust to make legal and financial decisions on your behalf if you, for instance, have an accident, fall ill or lose capacity. The benefit of an enduring power of attorney is that unlike an ordinary power of attorney, it will continue to operate even if you lose full legal capacity.
An enduring power of attorney is an extremely powerful legal document, so it’s not only vital to ensure you have one in place, but it’s also critical that you appoint the right person or persons for the job.
Your attorney can step into your shoes and enter into contracts, operate your bank accounts and pay your bills for you. They even have the ability to sell your house or incur debt on your behalf.
It is a position that carries great responsibility and your attorney(s) should always act in your best interests. You can imagine the possible problems and difficulties that can ensure if your appointed attorneys don’t get along or can’t agree on important decisions that need to be made. If you can foresee conflicting issues arising amongst your attorneys, or if there is no one that you can absolutely trust, appointing a reputable, professional trustee company may be a good option.
What happens if you don’t have an enduring power of attorney?
If you do not get around to putting an enduring power of attorney in place and suffer an illness or loss of mental capacity, an application would need to be made to the relevant Administrative Tribunal in your state or territory for a financial administrator to be appointed to act on your behalf.
If the relevant Administrative Tribunal feels there are no appropriate family members or friends who can be appointed, they would usually appoint the Public Trustee to manage your financial affairs.
If you would like more information about enduring powers of attorney, please contact Daniel Morcombe at Omnis Financial Planning on 08 9380 3555.
Disclaimer: This article is for information purpose only and does not constitute advice and does not take into account any of your objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain and read the product disclosure statement. NEO Financial Solutions: AFSL 385845 ABN 64 141 607 098
Source: Australian Executor Trustees