A Guide to Enduring Power of Attorney and Estate Planning 

Having a comprehensive Power of Attorney (POA) is fundamental to effective estate planning in Australia. This legal tool allows individuals to appoint a trusted person to make decisions on their behalf, particularly when they are unable to do so due to illness, incapacity, or absence. This article explores the different types of Power of Attorney, with a focus on New South Wales Enduring Power of Attorney, as well as its counterparts in other Australian states. 

 A Power of Attorney is a legal document that grants authority to another individual (the Attorney) to act on behalf of the person creating the POA. This may include making financial decisions, managing property, and handling personal affairs. The scope and limitations of this authority can be clearly defined within the document itself.

 Types of Power of Attorney 

 In Australia, there are single types of Power of Attorney

  • General Power of Attorney: This type of Power of Attorney allows the appointed Attorney to act on behalf of the individual for a specific period or particular transactions. However, it becomes invalid if the individual loses decision-making capacity.

  • Enduring Power of Attorney (EPA): Unlike a General Power of Attorney, an EPA remains valid even if the individual loses decision-making capacity. This is essential for long-term planning, ensuring that someone can manage your affairs if you become incapacitated.

  • A Power of Attorney is a legal document that allows an individual (the principal) to authorize another person (the Attorney) to make decisions on their behalf regarding financial or personal matters.

  • An Enduring Power of Attorney remains effective even if the principal loses decision-making capacity due to illness or injury, allowing the appointed Attorney to continue managing their affairs.

  • To create an Enduring Power of Attorney in NSW, you must complete a prescribed form, which includes signatures from both you and a qualified witness who meets the required criteria.

  • Yes, as long as you have capacity, you can revoke your Power of Attorney at any time by providing written notice to your Attorney.

  • If you don’t have a Power of Attorney and become incapacitated, a court may appoint someone (an administrator) to manage your affairs, which may not align with your personal wishes.

Key Features of an Enduring Power of Attorney (EPA)

  • Capacity Requirements: To create an EPA, the individual (known as the principal) must have decision-making capacity at the time of signing. This means they must understand the nature and effect of the document.

  • Decision-Making Authority: An EPA can be customized to allow the Attorney to make financial decisions, personal decisions, or both. The principal specifies which areas the Attorney will have authority over.

  • Activation Conditions: The principal can choose when the EPA becomes effective—either immediately upon signing or only when they lose decision-making capacity.

Responsibilities of an Attorney
An Attorney under an EPA has specific duties, including:

  • Acting in good faith and in the best interests of the principal.

  • Keeping accurate records of all decisions made on behalf of the principal.

  • Avoiding any conflicts of interest unless expressly authorized.

Revoking an Enduring Power of Attorney
The principal retains the right to revoke or cancel their EPA as long as they still have decision-making capacity. If concerns arise about the Attorney’s actions, family members or interested parties may seek intervention from authorities, such as the NSW Civil and Administrative Tribunal (NCAT).

Enduring Power of Attorney Across Australia
While each state has its own regulations governing Powers of Attorney, many principles are consistent across Australia. In New South Wales (NSW), for example, an Enduring Power of Attorney operates similarly to Victoria's, but it follows the Powers of Attorney Act 2003. In Queensland and Western Australia, enduring powers also exist but may have specific witnessing requirements and forms.

 

Importance in Estate Planning

Having an Enduring Power of Attorney (EPA) in New South Wales is essential for comprehensive estate planning. It ensures that your financial and personal matters are managed according to your wishes if you become unable to handle them yourself due to illness or incapacity.

Choosing Your Power of Attorney in Australia

Selecting the right person as your Attorney is a critical decision. Consider the following factors:

  • Trustworthiness: Choose someone you believe will act in your best interests.

  • Understanding: Ensure the person fully understands their responsibilities and is willing to take on the role.

  • Availability: Make sure the person will be available when needed, especially if you anticipate long-term incapacity.

Regulations Governing the Formation of a Power of Attorney in NSW

Creating a legally binding Power of Attorney involves several important steps:

  • Drafting the Document: It’s advisable to use an approved form provided by legal services or consult a lawyer to ensure all required details are included.

  • Signing and Witnessing: In NSW, an Enduring Power of Attorney must be signed by the principal (the person granting the power) in the presence of a qualified witness, such as a lawyer or doctor.

  • Providing Copies: Once the document is signed, it’s important to give copies to your Attorney and relevant institutions, such as banks.

Execution Requirements for a Power of Attorney in NSW

In New South Wales, the execution requirements for a Power of Attorney are governed by the Powers of Attorney Act 2003. This legislation outlines the necessary procedures to ensure the document is legally binding and that the principal's intentions are clear. Below are the key execution requirements for both General and Enduring Powers of Attorney in NSW:

  • Capacity: The principal must be at least 18 years old and have the mental capacity to understand the nature and effect of the Power of Attorney at the time of signing.

  • Types of Power of Attorney:

    • General Power of Attorney: This is effective for specific actions or periods and ceases if the principal loses capacity.

    • Enduring Power of Attorney: This remains effective even if the principal loses capacity.