Most people have heard of a legal document called Power of Attorney, but not many understand the different types of Powers of Attorney, how they work, when and how to create one, the terms to include or whom to appoint as your agent.
This is an example of where a little knowledge can be a dangerous thing. Powers of Attorney are a specialised area of law.
Don’t be fooled into believing the lady at the hairdresser or the bloke down the pub who says that it is easy to do this yourself, or that the lawyer who handled your divorce, or your uncle’s drink-driving offence, can easily do this. If you pay peanuts, you’re very likely to get monkeys.
When putting your affairs in order there are lots of traps for the unwary regarding Powers of Attorney, and how they relate to Probate, intestacy, superannuation, contested estates, Inheritance Family Provision claims, Protected Estates, dealings with Public Trustee; Guardianship hearings, community treatment orders and financial administration orders.
Throw in an ageing population, a massive increase in dementia, elder abuse on the rise, and you’ve got a perfect storm to confuse people and create expensive problems when creating an effective Enduring Power of Attorney – unless you know what you’re doing.
So saddle up and we’ll take a quick gallop through this topic.
A power of attorney is a written legal document that allows you to appoint one or more trusted persons to represent you and act on your behalf in private, business, legal and financial matters.
The person doing the authorising is called the principal, grantor, or donor. The nominated person is called the agent, grantee, donee or attorney.
What is the difference between a power of attorney and an enduring power of attorney?
A General Power of Attorney can no longer be used once a person can no longer make decisions or act on their own. This is where an Enduring Power of Attorney comes in.
An Enduring Power of Attorney can be used when a person has ‘lost capacity’, but must be appointed beforehand.
If you are not able to make legal or financial decisions for yourself, your Agent under Enduring Power of Attorney can step into your shoes and keep things in order on your behalf.
However, not all Enduring Powers of Attorney are created equal. In fact most standard documents are insufficient to enable your Agent under Enduring Power of Attorney to do things that you might expect or want them to be able to do.
For example, unless specifically authorised, your Agent under Enduring Power of Attorney cannot use your money to look after your spouse or kids.
This is because an Agent under Enduring Power of Attorney is generally only authorised to act wholly and solely in your interests – and not in the interests of your family and other loved ones.
We can help you make sure that your Enduring Power of Attorney covers what you want it to do. Download our free eBook: “Powers of Attorney in South Australia” here.
Learn how to protect yourself, your family and your assets through modern integrated estate planning solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how they can help you and yours.
What can my Enduring Power of Attorney cover?
A modern Enduring Power of Attorney can cover many issues, including:
Support for your family
Generally your Agent under Enduring Power of Attorney must act solely in your interest – which does not extend to them financially supporting your family and other dependants.
If your Agent under Enduring Power of Attorney supports your family without an express authority to do so they can end up being sued by your executor, or one of your beneficiaries.
Acknowledging conflicts of interest
Similar to the issue raised above, if you appoint your spouse as your Agent under Enduring Power of Attorney (which is very common), and they do something that benefits themselves (even if it also benefits you, e.g. paying the mortgage on the house where you both live), once again they are exposed to potentially being sued by your executor or a beneficiary under your estate (e.g. your children).
We can include provisions that ensure they are not exposed to this risk.
Authorising disclosure of information
Your agent is most likely going to need to disclose some of your personal information to third parties, as well as require third parties to disclose your personal information to them.
Strict privacy and confidentiality laws mean that many people and authorities will not disclose information to your Agent under Enduring Power of Attorney without your express authority.
We can include this authority and a Consent to Disclosure in your Enduring Power of Attorney.
Access to a copy of your Will
We generally recommend you give your Agent under Enduring Power of Attorney access to a copy of your Will (not the original), so they can make decisions on your behalf with knowledge of how you want your estate to be divided up when you die.
In some circumstances, if your Agent under Enduring Power of Attorney deals with your property in a manner that is inconsistent with your Will, then the person who would have benefited under your Will may have an action against them.
Management of your superannuation benefits
Superannuation is often a significant asset – and one to which your Agent under Enduring Power of Attorney may require access in order to properly provide for you and your family while you are incapacitated.
Your Agent under Enduring Power of Attorney may also be advised to withdraw certain super benefits on your behalf prior to your death in order to minimise the extent of tax on those benefits.
Without express authority, your super fund trustees may refuse to act on the directions of your Agent under Enduring Power of Attorney. This issue is even more important if you have a self-managed super fund.
Accommodation and Lifestyle Choices
Your Agent(s) under Enduring Power of Attorney may have to work with the Substitute Decision Maker(s) under your Advance Care directive to make decisions about your accommodation, lifestyle, healthcare and medical treatment.
They have a wide discretion as to how you are looked after. They can determine the extent of your lifestyle, and things like whether you stay at home or are funded into a nursing home.
In order to define this discretion (and provide your Agent under Enduring Power of Attorney with helpful guidance) you can give specific instructions as to the lifestyle in which you with to be maintained – either prioritising your standard of living, or maximising the value of your estate.
Digital Assets
Increasingly we are all living more of our lives online. If we become incapacitated, how will your agent access your logins and passwords to operate your online accounts? Protecting your digital assets has become critically important. We can include clauses in your Enduring Power of Attorney to assist.
Making gifts and donating to charity
You might support some charities that are important to you, but your agent won’t be able to continue with your giving-program unless you expressly authorise this.
Otherwise, giving away your money to charity may not be deemed to be in your best interests, and expose your Agent under Enduring Power of Attorney to liability.
Holding your Agent to account
You should only appoint someone as your Agent under Enduring Power of Attorney if you truly trust them. However, even so, having checks-and-balances in place is always a good idea.
For example, requiring your Agent under Enduring Power of Attorney to account for their actions to one or more other persons (such as your accountant or lawyer).
Not only can these checks keep your Agent under Enduring Power of Attorney on the straight-and-narrow, they can also be used to ensure communication between your Agent under Enduring Power of Attorney and family members, so that suspicion does not build up and destroy relationships.
To put in place a comprehensive Enduring Power of Attorney, or to update your existing documents, learn how to protect yourself, your family and your assets through modern integrated estate planning solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how they can help you and yours.
Click here to find out more about how we can help you with your Estate Planning needs.
Creating an effective and meaningful Enduring Power of Attorney is critically important.
Like insurance, you must put this protective mechanism in place BEFORE the disaster strikes. (You cannot apply for insurance AFTER the bushfire has swept through your property.
You need to have it in place before you need it. It is the same with an Enduring Power of Attorney.
If you wait until you need it, then you will probably have lost the capacity you require to make the document in the first place!
It is no good saying that you are too young and fit to need an Enduring Power of Attorney yet. If an accident or health emergency strikes, it could then be too late to obtain this protection.
An Enduring Power of Attorney is best created as part of a modern integrated estate plan.
As part of this process, it’s a very good idea to look at putting all your affairs in order and explore your estate planning options, by contacting a specialist lawyer who is experienced in estate planning in South Australia.
Founded in 1848, Genders & Partners is the oldest law firm in South Australia. They choose to specialise in just a few areas of law closest to most families, so that they can provide the legal services that matter most to you and your family.
Their experienced estate planning team can discuss many estate planning tools and techniques including:
- helping you to identify, understand and manage risks in your legal and financial affairs;
- protect your digital assets;
- creation of protective trusts;
- titling of assets for joint ownership;
- consideration of insurance options.
Choosing the right estate planning lawyers can make a huge difference in ensuring proper distribution of your assets after death, minimising or avoiding any legal issues that may arise, and protecting your hard-earned assets.
Most importantly, it helps save your family all the trouble, as well as thousands of dollars in legal fees and taxes, after your death.
Download our free eBook: “Powers of Attorney in South Australia” here.
Genders and Partners is the oldest law firm in South Australia, established 1848. Contact them to learn how to protect yourself, your family and your assets through modern integrated estate planning solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how they can help you and yours.
To learn how to protect yourself, your family and your assets, by creating a professionally-made estate plan, claim your FREE 15 minute Telephone Consultation .
PS Don’t forget to download our free eBook: “Powers of Attorney in South Australia” here.
eBook Powers of Attorney in South Australia
If you’ve been appointed as agent under Power of Attorney and don’t quite know what to do, or you’re about to create a Power of Attorney for yourself (or know someone who is), then this powerful and informative resource will guide you through the Do’s and Don’ts.
Written by a senior specialist South Australian lawyer in an easy to read style, and updated for 2018, this 26 page booklet gives you the information you need.