A Power of Attorney is a legal document that authorises another person to do certain things for you. The person who gives the Power of Attorney is called the donor, while the person to whom the power is given can be called the attorney.
Powers of Attorney are regulated by individual state legislations.
You can use them for a specific task or you can use it to plan for the future.
The Power of Attorney outlines:
It may be drafted:
In some states, a Power of Attorney only allows the attorney to make decisions in regards to the financial affairs of the donor. For the attorney in those states to be able to make lifestyle and medical decisions for the donor, they will need to have an Enduring Guardianship or Medical Power of Attorney.
A Power of Attorney operates immediately on execution (ie upon it being signed and witnessed), unless the power itself fixes the starting date.
There are 2 basic approaches to Powers of Attorney:
A Non-enduring Power of Attorney can be set up so the attorney can cover a specific event for a fixed period of time. For instance, it can be granted for the duration of your absence if you go overseas.
Non-enduring Powers of Attorney become invalid if the person who granted the power becomes mentally incapacitated.
The Enduring Power of Attorney is suited to looking after the financial affairs of a person when they are not in a position to look after their affairs themselves.
Unlike a general Power of Attorney, an Enduring Power of Attorney continues to operate when a person becomes mentally incapacitated. However, in most states, it does not allow the attorney to make lifestyle and medical decisions for the donor. This would be covered in most states by appointing an Enduring Guardian.
Granting an Enduring Power of Attorney will make sure your financial affairs can be handled on your behalf should anything happen to you and will continue to operate if you became ill or disabled, losing the capacity to make decisions.
For more information and to execute an Enduring Power of Attorney/Guardianship in accordance with the rules in your state, please consult your solicitor.
What you need to know
This information is provided by Invest Blue Limited (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.