What is a Power of attorney?
A Power of Attorney (POA) is a legal document that allows you to appoint someone you trust giving that person/s the authority to act on your behalf in certain situations and can include managing your financial affairs.
This authority may extend to decisions regarding your finances, property, health care, or other matters. A Power of Attorney can be useful in a range of circumstances, such as if you become incapacitated, are unable to manage your affairs due to illness or travel, or simply wish to have someone you trust handle matters on your behalf.
While the requirements vary from state to state, there are two categories of POA's:
- General Power of Attorney: a general POA remains in effect only while you have mental capacity. It allows an attorney to make decisions about your financial matters.
- Enduring Power of Attorney: An enduring POA remains in effect even if you become mentally incapacitated. It allows an attorney to make decisions about your financial and/or health matters.
A POA can be set-up in such a way that it only comes into effect if a specific event occurs (for example, if you become incapacitated) and limits can be placed on attorney's powers (for example, the appointment can be limited to certain tasks, such as selling your property).
Why a Power of Attorney is important
Having a Power of Attorney in place is an important part of planning for the future. It can provide peace of mind and protect your interests if you become incapacitated.
Appointing an attorney:
Protects your interests
If you become incapacitated and have an enduring POA in place, your attorney has the authority to make decisions on your behalf to protect your interests.
Avoids guardianship
If you do not have a POA in place, a court may appoint an administrator or guardian to make decisions for you. This can be a long and expensive process.
Allows for a smooth transition of affairs
If you are unable to handle your affairs due to illness or travel, a POA allows someone else to handle your affairs without interruption. For example, if you were to go on an overseas trip and you’re unable to call your bank, your attorney (if authorised on your bank account), may be able to assist by talking to your bank for you.
Gives peace of mind
Knowing that someone you trust has the authority to handle your affairs can give you peace of mind.
How to choose a person for Power of Attorney
When selecting someone to act as your attorney, it's important to choose a person you trust. This person should be dependable, responsible, and committed to acting in your best interests. It may be practical to appoint someone who lives nearby or is easily accessible should they need to make decisions on your behalf.
You may choose to appoint multiple attorneys and specificy whether they must make decisions jointly or may act independently. In addition, chosen attorneys must also meet certain legal requirements, such as being over 18 years of age.
Appointing your attorney
There are strict requirements for appointing an attorney, which vary from state to state. You will need to complete the correct form, and in certain cases, you may need to register your POA (for example, if you wish for your attorney to act on your behalf in property transactions). If you have questions about POAs or need help setting one up, you should consider consulting a lawyer for guidance.
Where to find help
More information
External financial support services
When you need extra support, there are a range of free services you can access for information and confidential counselling on your situation.
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