WNA Blog

Tue 28 Apr 2020

Power of Attorney – What Are They and Which Type Do I Need?

Legal Services
WNA power of attorney
A power of attorney allows a person (the attorney) to carry out acts in the name of another person (the principal).

The acts are financial in nature — including signing documents, for example, cheques, on behalf of the principal, and having to access to the principal’s bank accounts. 

Provided a power of attorney is valid, has not been revoked, and the attorney is working within the parameters of a power of attorney, those acts are binding upon the principal. Accordingly, the power of attorney is a powerful legal document.

General Power of Attorney or Enduring Power of Attorney

A non-enduring or general power of attorney ceases to affect if the attorney loses capacity after the document’s execution. Powers of attorney of this type are of use in a variety of situations, for example, if the principal will be unavailable for a time and financial decisions need to be made in his or her absence.

While such documents are very useful, more important for estate planning and elder law are enduring powers of attorney. These documents continue to affect even if capacity is lost after the execution of the document.

If a person with capacity finds out about inappropriate use of the power of attorney (or even the making of a decision with which he or she does not agree) or changes his or her mind about who should be their attorney, it is simple for him or her to revoke a power of attorney. However, if capacity has been lost, and there is an enduring power of attorney in place, the principal is unable to revoke the power. 

In those circumstances, the principal may be unaware of the decisions that have been made or be able to evaluate those decisions effectively. Accordingly, as powerful as a power of attorney is, an enduring power of attorney is even more powerful.

As the level of responsibility is high, enduring power of attorney should appoint a person or persons whom the principal trusts unconditionally; and if appropriate, contain checks and balances, for example, limitations on decision-making or appointment of more than one attorney to act together.

Why is an enduring power of attorney necessary?

These days, most people’s financial affairs are such that if they lost capacity, someone would be needed to manage those affairs on their behalf. If there is no valid enduring power of attorney, a financial management order may need to be made by a court or tribunal. 

Most people should have some control over who would make decisions on their behalf (by way of an enduring power of attorney) rather than allow the decision to be made on their behalf by a court or tribunal (by means of financial management) after capacity is lost when they have little say and no control over the process.

What can an attorney do under an Enduring Power of Attorney?

The legislation states what an attorney can do under an enduring power of attorney as follows:

· anything to one or more financial matters or personal matters for the principal that the principal could lawfully do by an attorney if the adult had a capacity for the matter when the power is exercised.

1. Financial Matters

  • paying maintenance and accommodation expenses for the principal and the principal’s dependants, including, for example, purchasing an interest in, or making another contribution to, an establishment that will maintain or accommodate the principal or a dependant of the principal;
  • paying the principal’s debts, including any fees and expenses to which an administrator is entitled under a document made by the principal or under the law;
  • receiving and recovering money payable to the principal;
  • carrying on a trade or business of the principal;
  • performing contracts entered into by the principal;
  • discharging a mortgage over the principal’s property;
  • paying rates, taxes, insurance premiums or other outgoings for the principal’s property; insuring the principal or the principal’s property;
  • otherwise preserving or improving the principal’s estate;
  • investing for the principal in authorised investments;
  • continuing investments of the principal, including taking uprights to issues of new shares, or options for new shares, to which the principal becomes entitled by the principal’s existing shareholding;
  • undertaking a real estate transaction for the principal;
  • dealing with land for the principal under the Land Act 1994 or Land Title Act 1994;
  • conducting a transaction for the principal involving the use of the principal’s property as security (for example, for a loan or by way of a guarantee) for an obligation the performance of which is beneficial to the principal;
  • a legal matter relating to the principal’s financial or property matters; and
  • withdrawing money from, or depositing money into, the principal’s account with a financial institution.

2. Legal matters

  • use of legal services to obtain information about the principal’s legal rights; and
  • use of legal services to undertake a transaction; and
  • use of legal services to bring or defend a proceeding before a court, tribunal or other entity, including an application under the Succession Act 1981, part 4 or an application for compensation arising from a compulsory acquisition; and
  • bringing or defending a proceeding, including settling a claim, whether before or after the start of a proceeding.

3. Personal matters 

  • where the principal lives;
  • with whom the principal lives;
  • whether the principal works and if so, the kind and place of work and the employer;
  • what education or training the principal undertakes;
  • whether the principal applies for a licence or permit; and
  • day-to-day issues, including, for example, diet and dress;
  • whether to consent to a forensic examination of the principal;
  • health care of the principal; and
  • a legal matter not relating to the principal’s financial or property matters.

­What can’t an attorney under an Enduring Power of Attorney do?

1. Special Personal Matters

Importantly, enduring power of attorney in Queensland does not authorise the attorney to make decisions regarding particular personal matters.

An individual personal matter is defined to include:

  • making or revoking the principal’s will;
  • making or revoking a power of attorney, enduring power of attorney or advance health directive of the principal;
  • exercising the principal’s right to vote in a Commonwealth, State or local government election or referendum;
  • consenting to adoption of a child of the principal under 18 years;
  • consenting to the marriage of the principal;
  • consenting to the principal entering into a registered relationship;
  • consenting to the principal terminating a registered relationship;
  • entering into, or agreeing to enter into, a surrogacy arrangement and
  • consenting to the making or discharge of a parentage order 

2. Gifts 

Unless specifically authorised in the enduring power of attorney, an attorney for financial matters may only make gifts if:

  • the gift is to a relation or close friend of the principal and of a seasonal nature or because of a particular event; or
  • the gift is a donation which the principal had previously made or might reasonably be expected to make; or
  • the gift’s value is not more than what is reasonable having regard to all the circumstances; and
  • in particular, the principal’s financial circumstances.

Powers of attorney (including enduring powers of attorney) do not confer upon the attorney the power to appoint a substitute or replacement attorney for him or herself to act as attorney of the principal.

If you’d like a Power of Attorney or other legal documentation relating to Wills and Estates, Robinson Nielsen will be happy to assist you.

This publication is not intended to be a comprehensive review of all developments in the law and practice or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this update to specific issues or transactions. For more information or specific advice on your circumstances, please contact tracey@robinsonnielsen.com.au.

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