January 15, 2013 by Todd
A power of attorney is a legal document which allows you choose another person or persons who can make decisions for you in relation to your money and assets.
There are two broad situations where you may want to appoint a power of attorney:
1. Where you expect to be away and unable to look after your finances for a short period;
2. For the time when you cannot look after your finances due to your health.
In either case, it is a good idea to appoint a responsible person who is good with money to look after your financial affairs when you are not able to do so.
What kinds of decisions can my attorney make?
Depending on what your power of attorney says, the person you appoint can do all of the things which you can do with your money and assets. Those things can include operating your bank account to pay your bills, buy your groceries, pay your mortgage or rent and so on. They can also include more complex things such as buying and selling your real estate, renewing a binding death nomination with your superannuation fund and exercising the power of a trustee (in some situations). Your attorney may decide to make different decisions to those which you would make in the same situation, and does not need your consent to do so, although you can place limits on the decisions they can make if you wish.
What happens if I don’t have a power of attorney?
If you do not have a power of attorney and there comes a time where you can’t look after your finances, your loved ones may need to make an application to the Guardianship Tribunal or the Supreme Court for a financial management order. Any application of that sort can take time and can be another source of stress which your loved ones could no doubt do without, and may prevent them from quickly accessing your money and assets in order to pay for things which you need. For example, if you are diagnosed with dementia and need to go into a nursing home, there can be a delay in that happening if access to your money and assets is required to pay the necessary bond.
What your power of attorney might say
A power of attorney can operate even where you no longer have capacity to oversee the exercise of the power. That said, you are able to place limits on what your attorney can do. You can:
1. Decide when the power of attorney starts and ends.
2. Say whether your attorney is able to make gifts and give benefits to others, and when they can do that.
3. Cancel the power of attorney if you change your mind, so long as you have ‘capacity’.
4. Tell your attorney to keep and maintain particular assets (this is particularly important where you have left specific property to someone in your will).
5. Appoint more than one attorney to act on your behalf.
An attorney must act in your best interests.
It makes sense to have a plan in place for your finances in case something unexpected happens. Contact us now to take the first step.
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