What is a Power of Attorney?
A Power of Attorney is a document by which one adult person (the donor) gives another adult person (attorney) the legal right to do on their behalf anything which can be legally be done by an attorney.
Common examples of authority given by a donor under a power of attorney include the power to sell a house owned by a donor or to enter into a legal contract. In those situations the attorney will execute the document with their own signature or seal which will then become legally binding on the donor.
Why make a Power of Attorney?
There are a number of situations in which a person may need a Power of Attorney. For example you may be leaving the country for a period of time and need someone to manage your finances or pay bills during your absence. The Power of Attorney allows that person to step into your shoes during your absence and do for you things that you are unable to do yourself.
For most people, however, the real value in making a Power of Attorney is that in most circumstances it can operate even though the donor no longer has the mental capacity to make decisions for themselves. This is referred to as an ‘enduring’ power and can be very important if a person becomes legally incapacitated and can no longer manage their own affairs. In these circumstances a Power of Attorney will allow a person you have chosen and trust to make your decisions for you.
Types of Powers of Attorney
Under current legislation in Victoria there are 4 main types of powers that can be given:
1. General Power of Attorney (under the Instruments Act 1958)
A general Power of Attorney is the same as an enduring Power of Attorney (see below) except that it does not endure in the event of the donor’s mental incapacity. The execution requirements are far less stringent.
2. Specific Power of Attorney (under the Instruments Act 1958)
A specific Power of Attorney is for a specified purpose and subject to limitations placed on it by the donor. For example a company may appoint a person attorney for the sole purpose of executing a Contact of Sale, Transfer of Land, Section 32 Vendor Statement and any other documents required to effect the conveyance of a particular block of land. The power would cease to have effect once settlement had occurred.
This Power of Attorney is less common then the enduring forms as it is automatically revoked if the donor becomes legally incapacitated and unable to make their own decisions.
3. Enduring Power of Attorney (Financial) (under the Instruments Act 1958)
A financial Power of Attorney allows the donor to appoint one or more people as their attorney and may allow for them to make financial and legal decisions that the donor themselves could make. It continues to have effect even if the donor subsequently loses legal capacity.
The appointment of an attorney may be unconditional and take effect upon signing by the donor and acceptance by the attorney or upon the happening of a certain date or event such as if the donor becomes incapacitated. It can also be for a specific purpose and subject to limitations stipulated by the donor.
The legislation imposes obligations on an attorney to keep accurate records and accounts of all transactions and dealings made under the power (section 125D) and to exercise their powers with reasonable diligence (sub-section 125(B)(5)(b)) and to avoid any conflict of interest with the interests of the donor (sub-section 125(B)(5)(c)).
4. Enduring Power of Attorney (Medical Treatment) (under the Medical Treatment Act 1988)
A medical Power of Attorney allows the appointed attorney to make decisions as to medical procedures, operations and the administration of drugs or medicine to the donor in the event they require medical treatment. However, unlike the financial Power of Attorney it only takes effect when the donor becomes incompetent and is unable to make decisions about treatment themselves.
In making a medical Power of Attorney the donor ensures that all medical decisions (except decisions as to the provision of food and water and treatment to relieve pain and suffering) are made by a person chosen by them who will act in their best interests. It also enables the donor to discuss with the attorney their beliefs about medical treatment and the circumstances in which they would want to refuse treatment.
For more information on making a Power of Attorney and the legal requirements that need to be satisfied for it to take effect please contact our office during office hours to make an appointment with one of our highly skilled solicitors.