Power of Attorney

Power of Attorney

A Power of Attorney is a legal document that authorises another person to act on your behalf in financial and legal matters. In New South Wales and throughout Australia the person granting the authority is known as the principal while the person appointed is called the attorney. Despite the name the attorney does not need to be a lawyer. The Power of Attorney can be broad or limited in scope depending on the wishes of the principal and the type of authority granted. It is a crucial legal tool used for estate planning business management and personal financial arrangements, and it provides peace of mind knowing that someone trusted can make decisions when you are unavailable incapacitated or otherwise unable to act

Types of Power of Attorney in New South Wales

There are two main types of Power of Attorney documents recognised under New South Wales law each serving a different purpose and operating under different conditions

• A General Power of Attorney allows someone to make financial and legal decisions on your behalf for a specific period or purpose such as while you are overseas or hospitalised. It automatically ends if the principal loses mental capacity
• An Enduring Power of Attorney continues even if the principal loses the ability to make decisions. It is commonly used in long-term planning and must be properly witnessed and signed while the principal is still mentally capable

These documents do not permit the attorney to make personal or medical decisions. Such decisions fall under a different legal instrument known as an Enduring Guardian appointment

What Can an Attorney Do

A Power of Attorney can be tailored to suit the principal’s individual needs and circumstances and may include wide-ranging powers or be limited to specific tasks

• An attorney may manage banking matters such as withdrawing or depositing money paying bills or transferring funds between accounts
• They can buy sell lease or manage real estate including signing contracts and dealing with property settlements
• Attorneys may handle investments shares or business operations especially if the principal is unable to attend to these due to illness travel or incapacity
• They may communicate with government bodies such as the ATO Centrelink or Service NSW and manage matters relating to tax returns and social security
• The attorney must act in the principal’s best interests avoid conflicts of interest and keep records of all transactions to ensure accountability and legal compliance

The scope of authority can be as broad or narrow as the principal chooses, and the Power of Attorney document should clearly specify the limits of decision-making

When Should You Make a Power of Attorney

Planning ahead is essential as a Power of Attorney can only be created while the principal has mental capacity. Once capacity is lost it is too late to appoint an attorney unless a court or tribunal steps in

• Many people create a Power of Attorney as part of their estate planning to ensure their financial affairs will be managed in the event of illness injury or mental decline
• If you are travelling overseas or will be away for an extended period a Power of Attorney ensures someone can act on your behalf locally if needed
• Business owners often use Powers of Attorney to allow trusted employees or family members to manage business decisions while they are unavailable
• Seniors or individuals with progressive health conditions may establish an Enduring Power of Attorney to prepare for the possibility of future incapacity
• Couples often grant each other Power of Attorney so that they can manage each other’s finances in situations of absence or emergency

Requirements for a Valid Power of Attorney in NSW

To be legally binding a Power of Attorney must comply with the formal requirements of the Powers of Attorney Act 2003 (NSW) and related legislation

• The principal must have legal capacity at the time of signing which means understanding the nature and effect of the document and the consequences of granting authority
• The Power of Attorney must be in writing using the prescribed form available from the NSW Land Registry Services or through a lawyer who can prepare a tailored version
• The signature of the principal must be witnessed by a prescribed witness such as a solicitor barrister registrar of a court or a licensed conveyancer
• The attorney must sign an acceptance clause indicating that they understand their duties and responsibilities
• If the Power of Attorney is intended to be used for real estate transactions it must be registered with the NSW Land Registry Services

Registration of a Power of Attorney

While not all Powers of Attorney must be registered there are circumstances where registration is required or recommended to protect the interests of the principal

• If the Power of Attorney will be used to buy sell or manage real property in NSW it must be registered with the NSW Land Registry Services
• Registration provides a public record of the document which may be useful in preventing disputes or verifying the attorney’s authority with financial institutions or third parties
• Registration also helps protect the principal’s interests in the event of fraud or abuse of power by creating a clear timeline and record of when the authority was granted
• Even when not legally required voluntary registration may be advisable for enduring Powers of Attorney that involve substantial assets or long-term arrangements

Duties and Responsibilities of the Attorney

The attorney has a legal duty to act honestly carefully and in the best interests of the principal. These obligations are outlined in legislation and case law and must be strictly followed

• The attorney must keep the principal’s money and property separate from their own and must not mix funds or use the principal’s assets for personal gain
• Accurate records and receipts of all transactions must be kept including bank statements and documents relating to financial decisions or property management
• The attorney must avoid conflicts of interest and should not enter into transactions where they may personally benefit unless specifically authorised in the document
• They should consult with the principal wherever possible and take reasonable steps to preserve the principal’s financial welfare
• If the attorney breaches their duties they may be held legally liable and the principal or their family can apply to a court or tribunal to have the attorney removed or actions reviewed

Can a Power of Attorney Be Cancelled or Changed

Yes, a principal can revoke or vary a Power of Attorney at any time as long as they have legal capacity. The revocation must be done in writing and should be communicated to the attorney and any institutions where the document has been used

• A revocation form is available through Service NSW, or your solicitor can prepare a formal document for you
• If the Power of Attorney was registered the revocation should also be registered to ensure it is legally recognised and enforceable
• If the principal loses capacity the only way to change or remove the attorney is through application to the NSW Civil and Administrative Tribunal or the Supreme Court
• In cases of dispute neglect or suspected abuse of power family members or concerned parties can apply to have the attorney investigated and removed

Power of Attorney vs Enduring Guardianship

It is important to understand that a Power of Attorney and an Enduring Guardianship are two separate legal arrangements with distinct purposes

• A Power of Attorney deals with legal and financial matters such as banking property and contracts
• An Enduring Guardian is appointed to make personal lifestyle and medical decisions such as healthcare accommodation and services if the principal loses capacity
• Both documents can and often should be made as part of comprehensive future planning especially for elderly or vulnerable individuals
• Each requires separate forms and different witnesses, and the appointments can be made to the same or different people depending on the principal’s wishes

Who Should You Appoint as Your Attorney

Choosing an attorney is a significant decision and the person appointed must be trustworthy responsible and capable of managing complex legal and financial affairs

• Many people choose a spouse adult child sibling or close friend as their attorney based on familiarity and trust
• It is possible to appoint more than one attorney either jointly or severally which means they can act together or independently depending on the principal’s preferences
• Professional attorneys such as solicitors or financial managers may be appointed particularly where there are large or complex assets involved or where family relationships are strained
• Appointing a substitute attorney is also recommended in case the first choice is unable or unwilling to act in the future
• Discussing the appointment with your prospective attorney before finalising the document ensures they are willing to take on the role and understand the responsibilities involved

Why Legal Advice Matters When Creating a Power of Attorney

While standard forms are available it is strongly recommended to seek legal advice when preparing a Power of Attorney especially if significant assets or future incapacity are involved

• A lawyer can ensure the document accurately reflects your intentions and is tailored to your personal situation including any conditions or restrictions you wish to impose
• Legal advice helps you understand the implications of granting power and ensures you appoint someone suitable with the authority you are comfortable with
• A solicitor can explain the legal duties of the attorney and help prevent future misunderstandings or disputes within families
• Lawyers can also advise on related planning matters such as Enduring Guardianship Wills and Advance Care Directives to ensure your legal and health wishes are aligned

Conclusion

A Power of Attorney is a powerful and practical legal tool that allows individuals to maintain control over their financial and legal affairs even when they are unable to act for themselves. Whether used for temporary purposes such as travel or as part of long-term planning for age or illness a well-drafted Power of Attorney ensures that your interests are protected, and your affairs are managed responsibly. However, it is essential to understand the legal requirements the duties of the appointed attorney and the importance of choosing someone trustworthy and capable. At Golottas Solicitors we help clients across New South Wales prepare comprehensive and legally sound Power of Attorney documents that provide security peace of mind and protection for the future. If you are considering making a Power of Attorney or want to review an existing one, contact our experienced team today for expert guidance and personalised legal support.