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15 June 2020

The Powers That Be

Change has a habit of happening when you least expect it. Yet without the correct legal safeguards in place the financial hit you or your family take could impact for generations to come.

There are many joys to be had in life but debilitating illness, along with taxes, will never be considered one of them. For this reason few of us enjoy contemplating how we would order our affairs should the worst happen.
 
Yet when it comes to securing our financial futures, arranging a Power of Attorney or an Enduring Power of Attorney to look after what’s important to us in the event we are incapacitated is almost as important as writing a will.
 
Despite the terminology used, Legal Aid New South Wales (LANSW) says an attorney when used in this sense does not necessarily mean a lawyer or solicitor.
 
“Your attorney may be a family member, close friend, a solicitor or a state trustee or guardian. An attorney can’t make health or lifestyle decisions for you, only financial ones,” it says.
 
Turnbull Hill Lawyers partner Rani Gandha, who specialises in property, business, wills and estates, says in its simplest form a Power of Attorney is a legal document where one person can give another authority to make personal and financial decisions on their behalf.
 
The types of duties usually carried out by someone appointed to this position range from accessing the appointor’s bank accounts to pay bills to purchasing or divesting their shares. In some circumstances the nominated attorney may be required to buy or sell property, communicate with superannuation funds to ensure that the appointor’s financial affairs are in order, or make important decisions concerning their charge’s health, Rani says.
 
A separate type of document but one which wields just as much power is an Enduring Power of Attorney – a document that determines the appointment of the attorney continues should you lose mental capacity.
 
Rani believes anyone over 18 should have an Enduring Power of Attorney in place.
 
“[This is] of particular importance if you are elderly, suffering from an illness, living overseas with property located in Australia, have a self-managed superannuation fund or are the sole director of a company. It's important that you have a suitable Enduring Power of Attorney in place because when you need it most it is typically too late to make one.”
 
One of the key differences between the two appointments is that a general Power of Attorney is usually given for a specific period of time, for example, if you plan to travel overseas or are going to hospital. It stops operating if you lose the ability to make your own decisions (lose capacity). It is automatically cancelled when you die.
 
“An enduring power of attorney will continue even after you have lost capacity. This is the one you should use if you want to give someone power to make decisions once you can no longer do so.”