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Losing control of finances, property, and other matters because of illness is a common occurrence for many individuals in Australia. However, the reality is that these complexities can be avoided, so long as you are aware of the process.
What is a Power of Attorney?
Loss of mental capacity can affect individuals of all ages, including elderly people who may be suffering from illness, or even younger individuals who may have been involved in an accident.
You may choose to appoint an attorney who will be responsible for managing and controlling your finances and assets once you become incapable of doing so yourself. This attorney is entrusted to do such things as buy and sell real estate, make enquiries on your behalf, and manage bank accounts.
Two types of Power of Attorney
General Power of Attorney
A General Power of Attorney is an individual that you appoint for a short term, or for a specific amount of time, for a particular purpose or to manage specific affairs. For example, managing your financial and legal affairs whilst you are overseas. A General Power of Attorney may also be beneficial for one-off transactions such as buying or selling property or financial assets. It is important to be aware that the General Power of Attorney is only valid if you are of a sound mind. The appointment becomes void if you pass away or loose mental capacity.
Enduring Power of Attorney
An Enduring Power of Attorney is an individual that you appoint to manage financial and legal decisions on your behalf and will continue to operate even where you lose mental capacity. An Enduring Power of Attorney is generally considered to be a long-term appointment. This appointment will ensure that your affairs are able to be dealt with in the future when you become unable to control them due to various reasons such as an unforeseen accident, loss of mental capacity, or physical problems. It is important to understand that you need to make this appoint whilst you have mental capacity, and cannot do so, if you are not mentally capable of understanding its nature and effects.
Like a General Power of Attorney, an Enduring Power of Attorney can be tailored to meet your circumstances. You can also impose special instructions and outline what your attorney is to do and can also prevent them from performing certain duties.
If you do not wish to appoint an Enduring Power of Attorney and subsequently become of unsound mind, it means that your financial and legal affairs cannot be managed, not even by your wife or husband. In this circumstance, an application must be made to the NSW Civil and Administrative Tribunal (NCAT) by a close family member or friend who would essentially be seeking to be able to control your affairs. The Tribunal must be satisfied that the applicant is fit and capable of managing your finances. If the Tribunal finds otherwise, then they may appoint an individual from the NSW Trustee and Guardian.
The Importance of Having a Power of Attorney
A Power of Attorney is seen as a protection and security against the possibility of having your financial and legal affairs exploited when you lose capacity to control them. The attorney can act on your behalf and do the tasks that you would normally be able to do, for example, sell, lease or mortgage your house, dispose of your belongings, and access your bank account.
Who Can I Appoint as a Power of Attorney?
An eligible Power of Attorney must:
- be of 18 years of age or older;
- understand the nature and purpose of the appointment.
It is important to be careful when appointing an attorney as this appointment places a substantial amount of trust and responsibility upon the person. Where possible, it may also be necessary to discuss the appointment and your intentions with the person.
Your attorney can be any individual. Although, it is advised that it be someone whom you know very well and can rely upon. Examples of a Power of Attorney include:
- Family member
- Close friend
- NSW Trustee & Guardian or another trustee organization
Remember, the person you appoint will be legally required to act on your behalf. Choose someone who:
- Will not exploit your money or gain unwanted financial benefit from using your money.
- Has knowledge of your finances and legal affairs, and keeps their matters separate from yours.
- Is practically capable of being able to manage your affairs.
- Respectful towards your circumstance, values, and existing relationships.
Death/ Mental Incapacity of your Attorney
Where your attorney dies or becomes mentally incapacitated during their appointment period, the appoint of the attorney automatically becomes cancelled. As it is possible for such circumstances to arise, having an alternative attorney may be beneficial.
How to Obtain a Power of Attorney
You can have your Power of Attorney completed by your solicitor. The document will then become registered with NSW Land Registry Services.
Contact Jameson Law to organize your Power of Attorney.
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