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Are you in the process of putting your estate planning in place? If so, it’s essential to add one more safeguard to your planning. This will ensure that there’s a specially designated person in place if you become incapacitated and can no longer make the necessary decisions about your life and your affairs.
Typically referred to as a Power of Attorney (POA), these agreements are drafted by Power of Attorney lawyers and ensure that your appointed person deals with your affairs. Keep reading as we define Power of Attorney and highlight the various benefits of having this process in place.
Understanding What a Power of Attorney is
At its core, a Power of Attorney refers to a legal agreement that authorises another person (usually your attorney) to make decisions on your behalf if you are no longer able to make them. The appointed person will be required to make decisions on any of the following aspects:
- Financial and property management
- Legal decisions
- Personal matters
- Medical decisions
A typical example of this happens when the individual (referred to as the principal in the legal scope) becomes incapacitated due to an accident or medical condition (such as a stroke or coma) and is no longer able to make valid decisions about their finances, medical considerations, or business matters. The agreement is a breakdown of what decisions you would want the appointed Power of Attorney to make on your behalf until you can resume your own decision-making.
Types of Powers of Attorney in the Australian Landscape
For the most part, there are two main types of Powers of Attorney widely used in Australia. These are discussed below.
Non-Enduring Power of Attorney
This type of Power of Attorney is usually used for a specified period or reason. A typical example of this is appointing someone to manage your finances or your business while you’re out of the country for a few months. This type of POA only applies when you (the principal) have full mental capacity. Should the principal lose their mental capacity due to injury or illness, this type of POA becomes invalid.
Enduring Power of Attorney
With this type of POA, the conditions are more comprehensive. In this agreement, the POA remains valid even if the principal loses mental capacity. An example here would be if you, as the principal, become seriously injured (such as a coma) on your extended trip, this POA would remain in effect, irrespective of your mental capacity.
This option is typically used to ensure long-term management of your personal matters, finances, and is specified, your medical decisions. Many people who plan for the possibility of mental incapacity often put these agreements in place. For instance, if dementia is hereditary in your family and you have tested positive for the dementia gene, it may be a good idea to have this type of agreement in place.
Safeguards Your Intentions No Matter What
You don’t have to own you’re business or have a huge fortune to share to have a POA in place. Having this agreement in place is crucial for several reasons, as shared below.
Protects Your Financial Management
Having a POA in place enables your POA lawyer to manage your financial affairs when you’re incapacitated. This can include ensuring that your bills are paid, managing any investments or business affairs, or even staying current with your tax matters.
Ensures Your Healthcare Decisions are Honoured
Another top reason to opt for a comprehensive POA is that it can be extended to cover healthcare decisions as well. This then allows your attorney to make medical decisions the way you would if you weren’t incapacitated. Adding this clause is essential if you have specific healthcare requirements such as organ donation, DNRs, or life support measures.
Eliminates Financial and Legal Complications
If you don’t have a POA in place, then someone may need to apply through the court to be appointed as the administrator or your guardian if you become incapacitated. This is not only time-consuming, but can also be costly to finalise. Being proactive and creating a POA ensures that your various affairs are handled the way you’d want by a person you trust.
Gives You Peace of Mind
No one plans to become incapacitated, yet it happens more than you’d think. Having a POA in place gives you and your family peace of mind that all aspects of your affairs will be managed by a trusted person. Enlisting a Power of Attorney lawyer ensures that this happens without delay and all decisions are made according to your wishes.
Final Thoughts
If you want to ensure that your finances, business, and medical decisions are made the way you wish them to be, even when you’re incapacitated, then drawing up a POA is essential. Our experts recommend consulting a Power of Attorney lawyer to establish what type of POA you will need for your unique circumstances. Doing this will give you the peace of mind that your intentions will be carried out should it ever become necessary.
