05 August 2010
Dear Fellow Investor,
Powers of Attorney
"Power of Attorney" is a phrase that many of us know but may not fully understand. In this edition of
Investment News we will be providing some answers to the common questions regarding
Powers of Attorney. It is important to keep in mind that this paper is only a brief outline of powers of attorney in Australia and that slight differences can occur from state to state.
Please note that this newsletter is not legal advice. You should seek your own
advice before entering any Power of Attorney.
What is a Power of Attorney?
A Power of Attorney is a legal document that is made by one person, (known as the "principal") which permits another person (known as the "attorney") to do things on the principal's behalf during the principal's lifetime. A principal is sometimes also referred to as a "donor" and an attorney as the "donee".
The purpose of a Power of Attorney is to provide proof of an attorney's powers. The
Power of Attorney allows the attorney to sign any document or do anything which the principal can do legally, subject to any conditions or limitations stated in the document.
Why would I want to have a Power of Attorney?
A Power of Attorney enables your affairs to be managed by a person of your choice in instances where you are unable to conduct your affairs, for example if you are travelling overseas, are ill or become mentally incapacitated
(enduring Powers of Attorney only).
Powers of Attorney may be used for almost any purpose, including authorising the attorney to collect debts, vote at meetings, operate a financial institution account or to carry out any other function which can be lawfully delegated.
Can anyone make a Power of Attorney?
To make a valid Power of Attorney you must be at least 18 years old and must understand the nature and effect of the document creating the power.
Who can be my Power of Attorney?
The word "attorney", when used in relation to "Power of Attorney", does not mean that the person appointed is a solicitor. The person appointed as your attorney can be any person over the age of 18 who is able to assist you. It can easily be a friend, family member, the Public Trustee or a trustee company or a trusted professional such as your Accountant or Solicitor.
What types of Powers of Attorney are there?
Powers of Attorney can be specific or general with the authority conferred by the
Power of Attorney being limited to specific acts or unlimited. The circumstances relating to why the Power of Attorney has been created often dictates the structure. For example, if you are going overseas, you may wish to make a
Power of Attorney so someone can look after your finances during the period you are away.
As noted earlier, Powers of Attorney can vary from state to state. Broadly speaking, however, they can be categorised into four types:
- General Powers of Attorney - which allow you to choose someone who will make specified financial and legal decisions on your behalf, keeping in mind that the power ceases if you lose the capacity to make your own decisions;
- Enduring Powers of Attorney (financial) - which allow you to choose someone to make financial and legal decisions for you
if you become unable to make these decisions;
- Enduring Powers of Attorney (medical treatment) - which allow you to choose someone to make decisions about your medical treatment
if you become unable to make these decisions; and
- Enduring Powers of Guardianship - which allow you to choose someone who can make lifestyle decisions for you.
It is important to remember that if you want to choose someone to make decisions for you in case you lose your capacity to make your own decisions you may need to make one or more enduring powers of attorney. Enduring powers are an option all people should consider because anyone can become ill or have an accident that may affect their ability to make decisions.
If you only want someone to make financial and legal decisions for a limited time such as when you are travelling you will need a general
Power of Attorney.
How do I make a Power of Attorney?
To make a Power of Attorney you can either engage a solicitor or use a trustee company to draw up the
Power of Attorney document. You may also able to purchase forms from your local newsagency, Australia Post shops or specialised stationers. Where a trustee company is used you will need to nominate the company as the attorney.
Do I have to register my Power of Attorney?
It may not be necessary to register a Power of Attorney, however, by registering a
Power of Attorney it will be:
- On record as a public document;
- Safe from loss or destruction; and
- More easily accepted as evidence that the attorney is allowed to deal with your assets.
It is important to note that where the Power of Attorney permits the sale, mortgage, lease or other such dealing with real estate it will usually be required to be registered before it becomes effective.
Can I cancel a Power of Attorney?
Generally, a Power of Attorney remains in force until it is terminated by the death, bankruptcy or insolvency of the principal or the purpose or time for which it was created has been fulfilled or has passed.
However, a Power of Attorney can be cancelled at any time as long as the principal still has mental capacity to do so. If the
Power of Attorney has been registered it is advisable that its cancellation also be registered. If third parties have been provided details of the
Power of Attorney they should also be notified of its cancellation.
What are my Attorney's obligations?
An attorney must not exceed the authority given under the Power of Attorney. If the attorney does exceed their authority, he or she may be liable for any damages suffered by the principal or others. An attorney is under a duty to act in the best interests of the principal at all times.
An attorney may pass on his or her powers and duties to another person only if authorised to do so by the
Power of Attorney document.
Do I have to pay my Attorney?
Except where the Power of Attorney document states otherwise, the attorney is not paid for his or her work as your attorney. However, they can claim any reasonable out of pocket expenses directly connected with carrying out the
Power of Attorney duties. If the Public Trustee, Trustee Company or professional is your attorney, the
Power of Attorney document will usually contain a clause allowing them to charge a fee for their services.
Can I use my Power of Attorney if it was made interstate or overseas?
Generally speaking, Powers of Attorney from overseas or other states may be able to be used. You should make your own enquiries in relation to this, however at minimum your
Power of Attorney document must have certain basic features such as being in English (or translated by a qualified translator), show the date it was made, detail the name of the principal and attorney, include a statement that the attorney has the power to act for the principal and be signed by the principal and witnessed by an appropriate person.
La Trobe Investment Team
La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 115 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.
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