Chances are you’ve heard of Powers of Attorney, and you might be broadly familiar with the concept, but do you have a Power of Attorney yourself? You may not think you need one, but like many legal documents, Powers of Attorney are a little effort now to save yourself from a lot of hassle or even a potential disaster in the future.
What is a Power of Attorney?
Generally speaking, a Power of Attorney is a legal document that allows an authorised person (known as the attorney) to act on another person’s behalf (the person who has made the Power of Attorney, known as the principal). There are many different types of Powers of Attorney, and they can range from very broad to highly specific to a given context or role.
In terms of what “regular” people may require, there are two main Powers of Attorney that standard elements of estate planning and therefore what we will focus on:
- An Enduring Power of Attorney; and
- An Appointment of Medical Treatment Decision Maker.
An Enduring Power of Attorney is used to authorise an attorney to act on your behalf in relation to your financial and personal matters. Financial matters include decisions regarding your property and finances; whilst personal matters relate to decisions as to guardianship and lifestyle affairs such as where you will reside. You can limit your attorney’s decision-making ability to cover financial matters only, personal matters only, or both.
An Appointment of Medical Treatment Decision Maker, formerly known as a Medical Enduring Power of Attorney, is used to authorise an attorney (in this context known as a decision maker) to consent to or refuse medical treatment on your behalf in the event you lose capacity and are unable to make medical treatment decisions for yourself.
Why do I need a Power of Attorney?
The main reason to have an Enduring Power of Attorney and Appointment of Medical Treatment Decision Maker is to prepare in case you no longer have the ability to make your own decisions.
Let’s say you have a car accident and are in hospital in a coma; there are decisions that would need to be made regarding your treatment, and without an Appointment of Medical Treatment Decision Maker the hospital would need to establish who is your next of kin and make contact prior to providing medical treatment. In these circumstances, time is incredibly precious, and any delay can be catastrophic. Comparatively, if you have an Appointment of Medical Treatment Decision Maker in place, not only does this clearly set out who is to act as your decision maker, it lists their phone number to enable contact as soon as possible.
Now let’s say you wake up from the coma, but you have suffered brain damage and are no longer capable of making your own decisions. You still need to live your life, but without decision-making capacity, you cannot enter into many forms of agreement that can be necessary to maintain your quality of life. If you have an Enduring Power of Attorney in place, this empowers your attorney to enter into these agreements as necessary to maintain your quality of life, and act in your interests when you are no longer able to do so.
Further, let's say that you've no longer capable of making your own decisions, and you own your house with a mortgage. Due to your injury, you may no longer be capable of making the mortgage payments, or you may have specific needs that make it difficult to live in this house; for example, it may be a two-storey house with an upstairs bedroom, and you may no longer able to use the stairs without assistance. In these circumstances it may be best to refinance or even sell the house to move into a more suitable property or assisted living. Whether you own the house in your sole name, or you own the house jointly with a spouse, without an Enduring Power of Attorney, or going through VCAT after you have already lost capacity, it will not be possible to do this. Whilst it is possible for one accountholder to act alone in relation to a joint bank account, it is not possible for one owner to act alone in relation to a property owned in joint names.
Although we all hope that such events would never occur, if you were in a car or other accident, Powers of Attorney are incredibly useful documents to have in place.
Additionally, whilst an Appointment of Medical Treatment Decision Maker will only take effect once you lose capacity, an Enduring Power of Attorney can be drafted to take effect once you lost capacity, once some other specific event occurs, or immediately which allows for added flexibility.
Let’s say you are be bed-ridden for a temporary but prolonged period. You may still be able to make your own decisions, but this can present a number of practical obstacles when you are unable to leave the house. An Enduring Power of Attorney can enable your attorney to act on your behalf in circumstances where it is difficult or even impossible for you to do so, providing peace of mind and making a difficult time that little bit easier.
An Enduring Power of Attorney is also extremely useful for someone who travels a lot; for example, it allows an attorney to enter into transactions on your behalf while you are on the other side of the world. Or let's say that your spouse or child is overseas, and they lose their passport; their attorney can go into the Passport Office in Australia with identification documents they left in Australia (such as a Birth Certificate) and complete the application for a new passport on their behalf.
Who should I appoint as my Attorney?
As you have likely gathered by now, Powers of Attorney can confer broad-ranging power on your attorney, so it is very important to carefully consider who you should appoint to ensure you have the right people for the right type of decision.
It is common for “regular” people to appoint their spouse, a family member or even a close friend as their attorney and/or decision maker, but this may not be an option for everyone. Perhaps your family is prone to conflict, and you are concerned that appointing one family member over another, or even appointing multiple family members, may lead to disputes. Or perhaps you do not have anyone who you feel is “qualified” to make decisions on your behalf. In these circumstances, it may be useful to consider a “professional” attorney; that is, a lawyer, accountant, or other provider of professional services.
A “professional” attorney will generally charge for their services if they are required to act under a Power of Attorney, but their position brings a high degree of objectivity, and the duties imposed on them by the nature of their profession holds them to a higher standard to ensure they always act in your best interests.
If you would like to discuss the appointment of a “professional” attorney, we recommend you discuss this with your prospective attorney, and at Burke & Associates we are more than happy to assist in this regard, or in relation to Powers of Attorney in general. If you would like to discuss appointing Burke & Associates Lawyers as your legal advisor or require any advice at all, please reach out to the lawyers in our Wills & Estates Division via phone on +61 3 9822 8588 or online via firstname.lastname@example.org
Insight written by Luke Palmer