Appointing a Power of Attorney is one of the most important steps you can take in managing your financial affairs. In an aging population where various mental and physical health ailments can remove our ability to manage our finances, it is even more crucial that a power of attorney and, in some circumstances an Enduring Power of Attorney, is appointed to deal with your financial affairs when you are no longer able to.
An Enduring Power of Attorney, gives the person you have appointed as Attorney the power to manage your finances and make financial decisions on your behalf,such as selling your house or operating your bank account.
Clearly, appointing an Enduring Power of Attorney imbues that person with a great deal of power. It is a position of great trust and importance. Unfortunately across NSW there are a growing number of cases where elderly people have fallen victim to financial abuse by people they have appointed as their Attorney. This occurs where the appointed Attorneyuses funds inappropriately without meeting their responsibilities to the elder who appointed them.
In choosing an Attorney, people often look to their children as their first choice. However, in many cases the abuse is perpetrated by the victim’s adult children.
Does this mean you should avoid appointing your adult children as your Attorney? Certainly not. If you have a strong, trusting relationship with your children, they are often the first and best choice for an appointment of this type. However, it is crucially important to understand the exact nature of the power you are giving, and how this power can be altered to suit your situation and manage the risk of financial abuse.
Some critical matters that need to be understood when appointing an Attorney under an Enduring Power of Attorney, include:
1. The financial attorney may have complete control over all of your assets.
Remember that your Attorney will have complete control over all your assets. This includes real estate, bank accounts, shares and all other property in your possession.
2. Your Attorney does not control your personal welfare.
Whilst appointing an Enduring Power of Attorney will ensure that your finances are managed, they do not have the power to make decisions about your wellbeing, including where you will live and medical decisions. These decisions can be made by appointing an Enduring Guardian.
3. It is very important to remember that you can choose when the power of attorney commences.
Often, people appoint an Attorney without realizing that their power will commence as soon as the document is finalised. If you are confident that you will not need assistance until you have lost capacity, it may be wise to nominate that the power does not commence until you lose the ability to make decisions for yourself.
4. You have the ability to limit the power of the Attorney
This is perhaps the most important consideration, and it is crucial that you understand the limitations that can be placed on your Attorney once appointed. For example, you can specify that your Attorney shall not enter into any transactions from which they gain a benefit, or that the power is limited for a specific period. Knowing the the limitations on the powers that you are giving your Attorney can give you peace of mind.
5. It is often wise to appoint more than one Attorney
Often it will be beneficial to appoint more than one Attorney. These Attorneys may act jointly, or in the majority. This ensures that the responsibility is spread between Attorneys rather than being left to one individual and that the decisions being made involve the opinion of more than one individual.
6. You should have implicit trust in the person/s that you appoint as your Attorney.
Should you have any reservations about an individual, then you should not appoint that person as your Attorney. The appointment to the position of Attorney is not only a privilege but it holds enormous responsibility. If you feel that you are unable to appoint a family member or friend, then you have the option of appointing the NSW Trustee and Guardian who can step in and make decisions on your behalf.
7. If, after you have appointed an Enduring Attorney, you can revoke that Enduring Power of Attorney
This can be done at any time, so long as you still have the mental capacity to do so.
8. Review your Enduring Power of Attorney
You should regularly review your Power of Attorney to check that the people you have appointed continue to be suitable, or to consider whether any limits should be applied to their power.
At Watkins Tapsell we have a qualified team of Wills & Estate and Family Law Lawyers who can assist in the preparation your enduring power of attorney taking into account each of the points raised above. If you would like any further information please do not hesitate to call.