Enduring Powers of Attorney

Enduring Powers of Attorney

Today I’m talking about enduring powers of attorney, the crucial part of your estate planning.

Younger people are often wondering, “Well, why have an enduring power of attorney?” For those who are a little older, it sort of goes without saying in some respects of having everything in order just in case something happens.

However, I think it applies to those who are younger as well.

So what is it, first?

An enduring power of attorney is a document that allows you to appoint someone else (your attorney-in-fact) to make decisions on your behalf if you’re not able to do so yourself. This could be anything from signing documents for you to handling your finances or even making healthcare decisions for you if necessary.

Most people know when you do a will your will starts once you pass away so the executors you put in your will don’t have any power until you’ve passed away. What happens in that period where you’re still alive but could be incompetent or unable to do things for yourself? That is what an enduring power of attorney does.

It’s called an enduring power of attorney because it endures past you losing capacity, whereas a general power of attorney only applies while you’ve still got your mental capacity but gives a power to someone else to do something on your behalf if you can’t do it for yourself, like if you were to be going overseas or some other sort of condition arising and you give a specific task to a specific person to do.

Whereas an enduring power of attorney is a little bit broader, you usually give broader powers, although you can narrow the conditions down about what to do if you can’t do things for yourself.

Why do I suggest younger people also doing an enduring power of attorney when you do your estate plan?

Well, because of an emergency. If there is an emergency and you’re in a car accident, for example, you might be stuck in the car for a while. You might then have a period of rehab or a period in a coma and then rehab or whatever it may be. You might have a brain injury. You’ll at least have someone that you have specified you want to look after things for you.

Whereas if you don’t have that and you have this emergency happen, then people will run off to VCAT to get an administration order and you don’t have a say over who gets that order or what the conditions are. Whereas if you do your enduring power of attorney, particularly if you’ve still got children who are under 18, the people you put in as your powers of attorney also step in, in a quasi role, as a parent. Particularly for single parents, if you don’t want the other parent to have complete control, if you are going through some kind of emergency situation, then you need to say who is the person with some parental responsibility to help with your dependents if you’re unable to.

Who has instructions about what to do with your children if you’re in hospital for a couple of weeks and unable to communicate what is needed. Who knows the routine well enough to keep things going. Who knows, administratively, how to keep your household running in terms of where bills are coming in, where you bank, and how to make sure things still get paid so your insurance stays in place, things don’t get cut off, or even if they can step in and actually live in your house with your children so the children are not as disrupted.

These are all the reasons why an enduring power of attorney can be really important.

It’s an in case of emergency sort of situation. If you don’t have it in place while you can do it and can decide what you want, then it’s too late to try and put something in place after something has happened so no harm in getting it done, when you get your will done, and doing all your documents all at once. Some other things around an enduring power of attorney, so in terms of conditions. For example, you actually would have it sitting dormant most of the time saying that it doesn’t actually commence until you have lost capacity, either physically or mentally, so that no one actually has any power to do anything unless that is triggered. Then, if you recover, then the power goes back away.

The other way you could do it is have a power begin immediately, but also have a condition in it to say that the people you appoint actually can’t do anything on your behalf without your specific direction, if you’ve still got capacity. This is really helpful if someone is actually a little bit older, they’ve still got their capacity, but they’re starting to slow down and they don’t actually want to be doing all their own admin.

They can have someone appointed who can do things but only on their direction.

Then, the other thing is, you’ve got to think about who you appoint as your power of attorney as well so it’s quite strict as to the rules around who you appoint in terms of what they can and can’t do. They can’t mix their own funds with yours. They can’t act in conflict with your interest and they can’t gift things to themselves or take a fee for doing it either. Keeping those things in mind as to the person that you would most trust to do this but, at the same time, if you appoint multiple people and they can keep an eye on each other but so does the law. The law is there to regulate these things and it has tightened up after there was some research into the circumstances around elder law about eight years ago or so and elder abuse, more particularly.

Laws have tightened up. It’s now a criminal offense, not just fraud so it’s a specific criminal offense now if someone appointed under a power of attorney does do the wrong thing and money can be recovered from that person.

There you are, the importance of a power of attorney. You can put certain conditions on it, such as choosing a person you trust to act as your agent in case you cannot make your own decisions. This person will have certain responsibilities and protections for both you and him/herself.