What do I need to know about Power of Attorney Documents?

What is a Power of Attorney?

A Power of Attorney is a legal document that allows you to nominate another person to make decisions about your financial and legal affairs on your behalf. The appointment of a Power of Attorney is governed by the Power of Attorney Act 2003 (NSW) and the Power of Attorney Regulations 2016 (NSW). The person that makes the Power of Attorney is called the ‘Principal’ and the person who is authorised by the principal to manage their financial and legal affairs is called the ‘Attorney’.

A Power of Attorney can be made by any person over 18 years of age and has capacity to appoint an Attorney. This means that a person must be capable of understanding the nature and effect of a Power of Attorney at the time that the document is made.

In New South Wales, there are two types of Powers of Attorney documents: A General Power of Attorney and an Enduring Power of Attorney

1. General Power of Attorney: This document authorises an Attorney to make financial decisions on behalf of the principal during a specific period or event, such as when the principal is travelling interstate or overseas and needs an Attorney to manage their financial affairs at home. This document becomes invalid if the principal loses the ability to make their own decisions, which when the principal loses mental capacity or  they die.

2. Enduring Power of Attorney: This document authorises an Attorney to make legal and financial Affairs on behalf of the principal and can be effective even after the principal loses mental capacity. This is often used in planning for future incapacity, for example, if you are involved in a car accident and as a result sustain brain damage or you in a coma, or through illness such as dementia. This type of Power of Attorney will only end when the principal dies, or if it is revoked by the principal while they still have mental capacity, or if it is revoked by a court or tribunal.

What is the difference between a Will and a Power of Attorney?

A Will and a Power of Attorney are both important legal documents, but they serve different purposes and operate at different times.

Will

A Will is a legal document that sets out how a person's property and money (known as their estate) should be distributed after their death. A Will nominates a person who is to carry out the terms of the Will and manage the estate. This person is called the ‘Executor’. A Will only come into effect after the person passes away.

Power of Attorney

A Power of Attorney is a legal document that gives another person (the attorney) the authority to make financial decisions on behalf of the person (the principal) who made the Power of Attorney. A Power of Attorney operates during the principal's lifetime and ceases to have effect upon the principal’s death.

When the principal dies and they had made a Will, then the Will would come into effect, and the executor would take over the responsibility of managing the property and money.

When does the Power of Attorney come into effect?

A Power of Attorney document comes into effect once it is signed and witnessed. The document can be in place for a specific period or event. An Enduring Power of Attorney can come into effect once it is signed and witness, or at a time specified by the principal, such as when the principal loses mental capacity.

If I make a Power of Attorney, would I lose control of my affairs?

Making a Power of Attorney does not mean you lose control of your affairs. As the principal and legal owner of your own property and money, you retain right to manage your own financial and legal affairs for as long as you have the capacity to do so.

Can I appoint more than one Attorney?

Yes, you can appoint more than one attorney. There are three ways in which multiple attorneys can be appointed:

1. Jointly: All the attorneys must make the decisions together and they must agree on every decision. If one of the attorneys is unable or unwilling to act, then the Power of Attorney document as a whole, may be become invalid.

2. Severally: Each attorney is able to act independently of the other attorneys. This means that each attorney can act on their own without needing to consult with the other attorneys. If one or more of the Attorneys become unable to or unwilling to act, the remaining attorney(s) can continue to act, and the Power of Attorney document can continue to operate. This can be useful if one guardian is not available to make a decision when required.

3. Jointly and Severally: The attorneys can make decisions either together or individually. For example, all of the attorneys could make all the decisions together concerning the sale of the principal’s property but the attorneys would individually make decisions regarding the payment of water, gas and electricity bills. If one or more of the Attorneys become unable to or unwilling to act, the remaining attorney(s) can still continue to act, and the Power of Attorney document can continue to operate.

When appointing more than one attorney, you should consider the nature of the relationship between the attorneys, their ability to work together, and the potential for conflict between the Attorneys. It is important that the people you choose will be able to work together effectively otherwise, this could potentially lead to disagreements and delays in crucial decision-making.

Who can witness a Power of Attorney?

In New South Wales, a Power of Attorney can be witnessed by any person over 18 years of age and who is not a party to the document. This means that the witness cannot be the person who is granting the power (the principal) or the person who is being appointed as the attorney or substitute attorney (if there is one).

However, for an Enduring Power of Attorney, the witness must be a "prescribed witness". This is defined under section 19 of the Powers of Attorney Act 2003 (NSW) as a legal practitioner or a registrar of the Local Court or a licensed conveyancer.

The prescribed witness must certify that:

1. They explained the effect of the Power of Attorney to the principal before it was signed
2. The principal appeared to understand the effect of the Power of Attorney
3. They are a prescribed witness
4. They are not an attorney under the Power of Attorney; and
5. They have witnessed the signature of the Power of Attorney by the principal

Do I need to register my Power of Attorney?

In New South Wales, you are not required to register your Power of Attorney unless it is going to be used for transactions involving your real estate. If the attorney needs to sell, mortgage, or otherwise deal with your real estate property, the Power of Attorney document must be registered with the NSW Land Registry Services (NSW).

However, even if you do not think that the Power of Attorney is needed for real estate transactions, it may still be a good idea to register it. This is because registration provides a public record of the document and can help prevent potential disputes or challenges to the Attorney's authority in the future.

Can a Power of Attorney made in New South Wales be used in other Australian jurisdictions?

A Power of Attorney made in New South Wales may be generally recognised in other Australian states and territories.

Can a Power of Attorney made in another Australian state be used in New South Wales?

Yes, a Power of Attorney made in a different Australian state may be recognised in New South Wales provided it is legally valid under the Australian laws of that state or territory.

However, if the Power of Attorney is to be used for a transaction involving real estate in NSW, it may need to be registered with NSW Land Registry Services. Furthermore, the attorney must still comply with New South Wales laws when using the Power of Attorney in NSW.

Any information on this website is general in nature and should not be taken as personal legal advice. We recommend that you speak to a lawyer about your personal circumstances.

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