May, 2008 

A power of attorney is a document which allows another person to make decisions on your behalf. There are lots of instances where you may want to execute a power of attorney. There may be situations where you want to give someone power to do something specific during a specific period of time. For example you may want someone to buy property on your behalf or to sign a legal document while you are on holiday.

You can also use a power of attorney to plan for the future so that someone you trust can deal with your property should you lose your capacity to deal with it yourself. You can give someone power to deal with your assets so your affairs can be properly managed and you can continue to support people who depend on you. It is not something that can be used after your death.

In NSW, the new Powers of Attorney Act 2003 which applies to any power of attorney created after 16 February 2004 has clarified the law relating to powers of attorney and gives additional protections to people wanting to appoint powers of attorney, so that they can be confident that their property will be dealt with in the way that they intend.

When creating a power of attorney, you can choose when it is to take effect from. There are a number of options:

• immediately;
• when the appointed attorney accepts it;
• between specified dates;
• when the attorney considers that you need assistance managing your affairs; or
• some other time.

You need to consider all the options that are available when creating a power of attorney.

If you want to use a power of attorney to enable someone to deal with your real estate, you must register the power of attorney. Powers of attorney are quite commonly used to deal with real estate. You can use them to do specific things such as enable someone to buy or sell property while you are away. You may want to take advantage of a particular opportunity that might arise or you may just need someone you trust to be able to handle your affairs for a period. Powers of attorney created for this purpose need to be as specific as possible.

If you want to set up a power of attorney to plan for the future, the new Act has removed a lot of the uncertainty surrounding enduring powers of attorney. An enduring power of attorney is a great way to ensure that your affairs will be properly managed should you lose your capacity through age or accident. You can include a simple statement that allows the person you appoint to give a reasonable level of gifts and benefits to cover your established social practices. If there are people who are dependent on you, the power can be used to provide for their living expenses. It can be used to give gifts to your family or close friends such as birthday and Christmas gifts. It can also be used to continue to make donations to charities which you would normally have made. Enduring powers of attorney are supervised by courts and tribunals (in NSW the Supreme Court and the Guardianship Tribunal) which can prevent an abuse of the powers.

There are number of protections in the new Act which protect the interest other people may have in your property. For example if the attorney disposes of property which is specifically given in a will, the beneficiaries retain an interest in the money or property which arises from that disposition. It also protects the rights of a spouse of someone who dies intestate (without leaving a will) if the attorney has disposed of the matrimonial home.

Valid enduring powers of attorney created in other States and Territories can be recognised in NSW. You need to be sure that the power of attorney was properly executed and bear in mind that it is will be limited to any power that could be conferred in NSW.

A power of attorney can give another person a lot of control over your property, assets and other affairs. You need to make sure it is properly set up so that the person you appoint will manage your affairs in accordance with your wishes. If you want to establish a power of attorney for a specific purpose or for long-term planning purposes, you should talk to a solicitor who can help you set up an appropriate power of attorney and explain to you the consequences of the particular power you create.
 
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