Who will look after things if I can’t? A Power of Attorney may be the appropriate way to provide peace of mind, but this area of the law is about to undergo changes from 1st September 2015 under a new state government Act of parliament that comes into effect on that date – the Powers of Attorney Act 2014.
You may be going overseas for that trip of a lifetime, but want to make sure that your affairs back home are properly managed. A “general power of attorney” may be the best option: you, as the “principal”, appoint an “attorney” to make decisions for you for a limited time. The power ceases in the event you lose the capacity to make these decisions for yourself. As from 1st September 2-15 this “general power of attorney” is to be known as a “general non-enduring power of attorney.”
An “enduring power of attorney – financial”, on the other hand, will continue, or “endure” even if you, as the principal, loses your mental capacity. The attorney is empowered to make decisions regarding financial matters, on your behalf, such as making investment decisions.
An “enduring power of guardianship” comes into effect if and when you lose your capacity, and empowers the attorney to make non-financial decisions on your behalf, such as lifestyle and personal matters and some health care decisions.
These two “enduring” powers are combined in the new post-1st September 2015 regime into a new single power called (somewhat confusingly!) the “enduring power of attorney”.
There is also an existing “enduring power of attorney – medical treatment” which facilitates the appointment of an attorney who is empowered to refuse medical treatment of the principal in certain circumstances the event capacity is lost. This power of attorney will continue unchanged by the new law.
The new law also creates a new role unique in Australia, called a “supportive attorney”, who helps you, as the principal, make decisions and assist you, in areas such as gathering information. Your attorney would not be making decisions on your behalf, but rather assist you in making the relevant decision yourself. We are yet to see how this may work in practice, but it may be expected to be of particular benefit for principals under some disability.
You may be pleased to know that the new law tightens up on abuses of which enduring powers of attorney were potentially capable, including better protection of a principal’s rights in the process of determining their capacity and also the decision making process where they are affected. The process of ‘execution’ – that is, the signing of the relevant documents – is made more stringent. The duties of attorneys are clearly set out and include the need to act honestly, diligently and in good faith and to exercise reasonable care and skill. Penalties for dishonest attorney abusing their powers are substantial, including prison terms and paying compensation for any loss caused.
After reading this, you may feel that a power of attorney (whichever sort or sorts!) is what you may need. If so, please call us on (03) 8650-0040. Updating or drafting a new Will can also be an ideal time to also explore whether a power of attorney may be right for you and your circumstances, (or those of a family member).
Don’t leave it too late! You will be pleasantly surprised at our fees.