The Powers of Attorney Act 2003 commenced on February 16, 2004 and the Act, with some exceptions, will only apply to Powers of Attorney created after that date.
What Is A Power Of Attorney?
A Power of Attorney is a document giving the person you appoint the power to do anything at law you can do, eg: pay bills, buy and sell real estate or shares, open and operate bank accounts, enter into litigation, enter into nursing home and hostel contracts.
If you appoint more than one attorney you can appoint them to act together or separately. You must appoint someone you trust.
The power given can be limited to a specific purpose eg; operating a bank account or selling real estate; or be a general power which permits the Attorney to carry out any business you can lawfully carry out.
You must have “capacity” to make a Power of Attorney. You can determine when the power is to commence operation. For example, upon you being assessed as unable to manage your financial affairs.
What is an enduring Power of attorney?
An Enduring Power of Attorney is a power of attorney that remains effective even if the person making the appointment loses their mental capacity after they have appointed an attorney. If the Power of Attorney is not ‘enduring’, it will cease to operate if the person becomes of unsound mind.
In the past, the person granting the power was the only person required to sign the document. The new legislation however, requires both the person granting the power and the person nominated as enduring attorney to sign and accept the conditions outlined in the document. This move brings NSW in line with other states and is similar to the procedures required when appointing an enduring guardian. It is important to note that the Enduring Power of Attorney instrument does not become operational until the nominated attorney has accepted the appointment and signed the document.
This new requirement applies to enduring powers of attorney and does not apply to ordinary powers of attorney.
The legislation also allows for some uniformity across Australia. The Act recognises powers of attorney made in other States and Territories.
Further, in order to more specifically control an attorney’s actions, the new Act states that an attorney cannot authorise a gift of all or any of the principal’s property unless such authority is clearly outlined in the document. There are also provisions to protect beneficiaries against the possible disposal of testamentary gifts or assets by an attorney prior to the death of the person granting the power.
The Act also gives the Guardianship Tribunal and the Administrative Appeals Tribunal a broader range of authority when dealing with matters of capacity to make a power of attorney and with breaches of the Trustee Act.
This information gives advice of a general nature and is not a substitute for legal advice. Please contact our specialist Estate Planning team to discuss your circumstances in detail.
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