The Underestimated Importance of an Enduring Power of Attorney

22 OCT 2019

 

When people consider getting their affairs in order, the first thing that springs to mind is having a Will prepared.  While having a Will is extremely important, a Will only comes into effect once someone passes away and does not protect you while you are living.

What happens if you lose capacity to make your own decisions during your lifetime because of dementia or a severe accident?

An Enduring Power of Attorney is designed to help keep your affairs in order during your lifetime and offer a little more certainty in times of difficulty.

Your Power of Attorney relates to your financial and legal affairs.  By appointing an attorney, you are appointing a person to be your “decision maker” if you were unable to make your legal and financial decisions yourself.  Anything you can do with your finances (such as open bank accounts, invest funds, pay bills, lodge tax returns, buy and sell property), your attorney will also have the power to do on your behalf.

Appointing an attorney does not prevent you from managing your own affairs, provided you have the capacity to do so.  You are able to continue to manage your own affairs and make your own decisions for as long as you are able. Appointing an attorney does not interfere with this right. 

If you are unsure of whether you would like another person helping with your affairs while you have capacity, you have the power to specify in the Enduring Power of Attorney that you do not want the document to come into effect until a doctor has stated that you do not have the capacity to manage your own affairs (and provides a document to that effect).  This prevents your attorney from dealing with your affairs until you are no longer able to manage them on your own.

What happens if you lose capacity and do not have an Enduring Power of Attorney in place?  You cannot make an Enduring Power of Attorney after you lose capacity.  If you were to lose capacity without having already made a Power of Attorney, this can cause difficulty for your loved ones as no one will have the legal authority to help you manage your affairs.  As a result, tasks such as paying bills, managing or finances or selling your property may become an ordeal for your loved ones. 

If this situation eventuates, a family member or another person will need to apply to the NSW Civil and Administrative Tribunal (NCAT) to have a financial manager appointed on your behalf.  This may not be who you would have chosen to manager your affairs. It is important to note that NCAT also have the power to appoint the NSW Trustee & Guardian as your attorney.

It is always better to be prepared.  When considering your Estate Planning, it is also important to consider how best to protect yourself during your lifetime.

If you have any questions or would like to make an appointment to discuss your Estate Planning, please contact the Partner in the Estate Planning Department, Krystle Wolthers on (02) 4626 5077 or at kwolthers@marsdens.net.au

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication

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