A Guide for Powers of Attorney

Transcription

1 A Guide for Powers of Attorney NSW Trustee & Guardian can prepare a Power of Attorney to ensure your financial affairs are professionally managed.

2 Contents Powers of Attorney: Your questions answered 3 What is a Power of Attorney? 4 What is the role of your attorney appointed under a Power of Attorney? 5 Why make a Power of Attorney? 8 I have a Will: isn t that sufficient? 9 What services does NSW Trustee & Guardian offer under a Power of Attorney? 9 Future Assist 10 Active Assist 10 Why should I appoint NSW Trustee & Guardian as my attorney? 12 How do I make a Power of Attorney? 13 Who can witness a Power of Attorney? 14 Do I need to register my Power of Attorney? 14 Where should I keep my Power of Attorney? 14 How do I cancel (revoke) a Power of Attorney? 15 What other pre-planning documents should I consider? 15 Enduring Guardianship 15 Advance Care Directives 15 Please note: The fees outlined in this guide are current at the time of publication. NSW Trustee & Guardian advises clients (and/or a person nominated by the client) of any change in fees, except where it is considered not practicable to do so by reason of state of health or mental capacity and where there is no nomination. 2

3 Powers of Attorney: Your questions answered NSW Trustee & Guardian provides professional services in Will making, Powers of Attorney, Trusts and Executor services. As a one stop shop, NSW Trustee & Guardian offers the expertise of solicitors, accountants, trust managers, taxation and investment specialists on staff. We have prepared this guide to answer common questions relating to making a Power of Attorney. If, after reading this booklet, you require further information on how we may be able to assist you with Powers of Attorney please call

4 What is a Power of Attorney? A Power of Attorney is a legal document which appoints a person or trustee organisation (the attorney) to act on behalf of another (called the principal or donor) to manage assets and financial affairs. The term attorney in this sense does not necessarily mean a lawyer or solicitor. The attorney may be a family member, close friend or trustee organisation such as NSW Trustee & Guardian. Appointing an attorney gives your attorney the legal authority to act on your behalf while you are alive. Since it only operates while you are alive a Power of Attorney does not affect your Will. A Will only comes into effect on death. In NSW, a Power of Attorney can only apply to financial or legal matters. You may for instance be travelling overseas and want to give your attorney access to your bank accounts to pay your bills, or collect and deposit income. Alternatively, it can be useful to have a Power of Attorney if you become unwell and are no longer able to manage your financial affairs in areas such as property, taxation or investments. Making a Power of Attorney does not mean that you will lose control over your financial affairs. As long as you retain mental capacity you still have authority to deal with your assets and money just as you did beforehand. A Power of Attorney simply gives your attorney formal authority to manage your financial affairs according to your instructions. Your Power of Attorney can be cancelled (revoked) at any time provided you have the mental capacity to do so. You can make either an Ordinary Power of Attorney or an Enduring Power of Attorney. The difference is that an Ordinary Power of Attorney ceases to have effect if a person loses mental capacity, while an Enduring Power of Attorney continues to be in force after you have lost capacity to self manage. This distinction is particularly important for older people as it will be too late to appoint someone you choose yourself should you succumb to dementia or other mental frailty. 4

5 What is the role of your attorney appointed under a Power of Attorney? A Power of Attorney enables your attorney to sign legally binding documents on your behalf according to your instructions when you are unable or do not want to do so personally. You can use a Power of Attorney for almost any financial purpose and authorise your attorney, for example, to collect debts, vote at meetings, operate your bank account/s, manage your investments (such as shares), collect rent, pay bills or carry out any other function which can be lawfully delegated. They will assume responsibility for financial and legal decisions on your behalf and it can be a demanding job which requires special skills. Your attorney should have the business and financial skills to manage your affairs properly and be capable of keeping accurate records of all dealings and transactions they undertake on your behalf. 5

6 Your attorney must agree to take on the role. Therefore, make sure you discuss your intentions to appoint someone as your attorney and what it is likely to involve before making the appointment. Even though you may know someone well they may find the role too daunting or may feel that they cannot carry it out as objectively as they should. Once you place control of your affairs into the hands of a private attorney, they have no legal obligation to report to any other person about the management of your affairs. This can leave you vulnerable to mismanagement of your affairs. A Power of Attorney can only be used in the manner granted. If your attorney exceeds their authority, legal action can be taken to protect your interests and your attorney is liable to pay compensation to you if you suffer loss as a consequence. As a professional attorney NSW Trustee & Guardian is able to ensure that they fully comply with their responsibilities as your attorney. 6

7 Your attorney is in an important position of trust and has a responsibility to always act only in your best interests. They must: avoid doing anything as an attorney which would mean that their interests conflict with your interests obey your instructions while you are mentally capable and any directions you make in the Enduring Power of Attorney act according to any limits or conditions placed on their authority not give gifts or give themselves or others a benefit using your finances unless you specifically authorise this for example, to family or close friends on special occasions, or make donations to your favoured charities. The gift given must be seen as reasonable given the circumstance keep their finances and money separate from yours keep accurate and proper records of their dealings with your finances or property. Your attorney should be a person or organisation in whom you can place your trust. Your attorney must also recognise your right to confidentiality, and respect your views and wishes, taking into account your existing relationships, values and culture. As a professional attorney NSW Trustee & Guardian is able to ensure that they fully comply with their responsibilities as your attorney. An elderly man gave his son Power of Attorney. When the man moved into a nursing home, the son sold his father s house and used the proceeds to pay off his own mortgage. The actions of the son were discovered only after the father died and there was little left in his estate. The other beneficiaries were left to try to recover the money that was misappropriated by the son. 7

8 Why make a Power of Attorney? There are times when you may want to entrust the management of your legal and financial affairs elsewhere. Perhaps you are about to retire or travel, or you may have the misfortune of an accident, illness or disability, or require an extended stay in hospital. Under such circumstances, should you not wish to be burdened with the day-to-day management of your financial affairs, you can make an Enduring Power of Attorney and ensure that the person or organisation you nominate to manage your financial affairs is what you want. If you re no longer able to manage your financial affairs and you don t have a valid Power of Attorney then there may be nobody with authority to manage your property and finances. Someone may need to apply to the Guardianship Division of the NSW Civil & Administrative Tribunal to appoint a financial manager to make these decisions for you. This involves a tribunal hearing where evidence will be heard to assess if you have lost legal capacity and whether you need to have someone appointed to make financial decisions on your behalf. If it is decided that you need someone to make decisions about your finances and legal affairs, a financial manager will be appointed. While they have an obligation to take your views into account, the ultimate decision rests with the tribunal. 8

9 The appointed financial manager may not necessarily be the person or organisation you would have chosen. This may be stressful for those involved and can cause considerable conflict and anguish among family and friends concerning who is appointed to make decisions on your behalf. You should make an Enduring Power of Attorney while you are in good health. Make sure you do not leave it too late. I have a Will isn t that sufficient? A Power of Attorney is as important for life planning as making a Will. Many people prepare a Will but do not give the same consideration to appointing an attorney until it is too late. Your Will ensures that your assets will be distributed according to your wishes after your death. A Power of Attorney lets you appoint someone who can manage your financial affairs on your behalf while you are alive. It is therefore important that you have both an Enduring Power of Attorney and a Will. A Power of Attorney ceases when you die. The executor named in your Will then takes over the responsibility of administering your estate. What services does NSW Trustee & Guardian offer under a Power of Attorney? NSW Trustee & Guardian offers what is sometimes called a dormant Power of Attorney: Future Assist. Then there is Active Assist which, as the name suggests, you can use straight away to assist in your financial affairs. Should your Future Assist Power of Attorney need to be activated, either by choice or if you lose the capacity to manage in the future, it becomes an Active Assist Power of Attorney. A Power of Attorney is as important for life planning as making a Will. You need to give the same consideration to appointing an attorney. 9

10 Future Assist Future Assist is a Power of Attorney designed as a safety net to provide you with peace of mind should you be unable to manage your financial affairs in the future. To take out a Future Assist you prepare a Power of Attorney appointing NSW Trustee & Guardian as your attorney, or substitute attorney. We hold your Power of Attorney document in safe custody and do nothing further until you need your attorney to assist you. Future Assist is free of preparation fees and continuing charges and any other fees. It is an ideal companion document to your Will as it ensures that you receive the expert and immediate assistance of NSW Trustee & Guardian if you require it at some stage in the future. Active Assist Active Assist through a Power of Attorney gives you the freedom to choose the exact level of financial assistance that you require. Whether it is short term management of your financial affairs while you are on holidays, or a continuing arrangement, we can tailor the level of assistance to free you from paperwork and the work involved in managing your finances. Circumstances where you may choose to use Active Assist include: You may wish to travel and don t want to deal with certain financial matters such as payment of accounts and bills while you are away. You may not want to burden a family member or friend with the responsibility of looking after your financial affairs. You may wish to be free of the day-to-day demands of financial paperwork and record keeping. Active Assist has a one-off establishment fee of $550 (incl. GST). An ongoing management fee of 1.1% of the value of income producing and investment assets managed by NSW Trustee & Guardian (excluding the principal place of residence) is charged half yearly in arrears. The minimum fee chargeable is $1,100 p.a. (incl. GST). A monthly account keeping fee of $11 (incl. GST) applies. Should you need any of the additional services below, the following fees apply (incl. GST): Where NSW Trustee & Guardian appoints a Registrar of the Local Court to act for it, fees will also be quoted on application (but not to exceed 2.5% of any money collected by the Registrar on NSW Trustee & Guardian s behalf). All out of pocket expenses and Agent s fees. Tax: Investigation and lodgement fee minimum $275 (incl. GST) up to 1 hour and up to $220 (incl. GST) for additional hours if required. Legal work: If work is undertaken for you by any of NSW Trustee & Guardian s panel firms their costs will be in addition to NSW Trustee & Guardian fees. 10

11 Financial tasks that we can undertake on your behalf include: collection of income, including dividends, interest, pensions and rents payment of bills such as rates, taxes, health funds, electricity, telephone and nursing homes property maintenance and management processing of heath fund accounts at your request, we can also, for an additional fee, assist you with portfolio reviews, tax returns and the buying and selling of real estate (including dealing with interests in retirement villages). According to your needs, you can use any or all of these services as you require. For example, you may wish to continue to actively oversee the management of your financial investments but no longer want to deal with day-to-day financial demands such as the payment of bills. Please note: The fees outlined in this section are current at the time of publication. NSW Trustee & Guardian advises clients (and/or a person nominated by the client) of any changes in fees, except where it is considered not practicable to do so by reason of state of health or mental capacity and where there is no nomination. 11

12 Why should I appoint NSW Trustee & Guardian as my attorney? It is important to choose your attorney carefully. You need to be able to trust that they do not have conflicts of interest, that they can be impartial and will act in your best interests. There are many reasons why you should consider appointing an independent specialist such as NSW Trustee & Guardian as your attorney: Many people nominate a close friend or relative as their attorney, without realising how difficult the job is. There may be demanding legal and financial responsibilities such as dealing with property and investments, banks and other financial institutions. Separate financial records and accounts must be kept, and decisions may be required that could create difficulties and lead to family dissent. Having a professional attorney such as NSW Trustee & Guardian can avoid many of these problems. We are independent and are therefore not subject to conflicts of interest which may apply to friends or family members, so we will always be able to act in your best interests. We have an established track record in the management of financial assets including real estate, businesses and overseas assets. All money that is managed by us is placed in our Common Fund where it earns interest. NSW Trustee & Guardian s annual ongoing fees for Active Assist will normally be deducted against your income account and ordinarily are tax deductible. We have a range of professional staff, including accountants and solicitors, to ensure your financial needs are looked after and your assets professionally managed. A friend or relative who is older may not be appropriate to appoint as your attorney as they may not survive you or be able to take on the role when required. NSW Trustee & Guardian, unlike an individual, will always be around to act as your attorney. 12

13 If you are one of our Will clients and would like us to make a Power of Attorney: The first named attorney(s) can be any person (other than a professional such as a solicitor, accountant, financial advisor or other trustee company) to a maximum of two people appointed to act jointly and/or severally. NSW Trustee & Guardian must be appointed substitute attorney. If you are not one of our Will clients and would like us to make a Power of Attorney: The first named attorney must be either NSW Trustee & Guardian or a spouse or de facto spouse or a person living in a close and caring relationship with you in the same household e.g. two sisters caring for each other. You can only appoint one person as your first named attorney. NSW Trustee & Guardian must be appointed substitute attorney. For all NSW Trustee & Guardian Powers of Attorney: When NSW Trustee & Guardian is named as substitute attorney, the Power of Attorney is only to operate if the first named attorney(s) is unable or unwilling to act. NSW Trustee & Guardian will not act jointly in Powers of Attorney with another attorney. How do I make a Power of Attorney? In order to make a valid Power of Attorney you must be 18 years or over and have sufficient capacity to understand the nature and effect of the appointment. This means that at the time of making your Power of Attorney you understand: the authority your Power of Attorney will have and what sort of decisions your attorney will be empowered to make when and how your attorney will have the authority to exercise their power the effect that your attorney s actions could have on you what options are open to you to cancel or change your attorney appointment in the future you can also start your Power of Attorney online at 13

14 When taking out a Power of Attorney with NSW Trustee & Guardian we will ensure that all areas covering legal capacity are addressed. Making a Power of Attorney involves signing a form appointing as an attorney the person or trustee organisation of your choice. You specify the types of decisions that your attorney will be able to make. Your attorney agrees to their appointment by signing the acceptance section of the form. Who can witness a Power of Attorney? Changes to Power of Attorney legislation have resulted in more specific requirements for witnesses of an Enduring Power of Attorney. At the end of all Enduring Power of Attorney forms there is a prescribed witness certificate. This certificate can only be completed by: solicitor or barrister Registrar of a NSW Local Court an employee of NSW Trustee & Guardian, or a private trustee company or a licensed conveyancer who has completed an approved course under the Powers of Attorney Act. The certificate states that the witness explained the effect of the Power of Attorney directly to you before it was signed, and that they were satisfied that you appeared to understand the effect of the Power of Attorney. Do I need to register my Power of Attorney? There is no requirement for your Power of Attorney to be registered. However, if you want your attorney to deal with any real estate you own in NSW, then the Power of Attorney document must be registered with Land and Property Information Division of the NSW Department of Lands. There is a fee charged by Land and Property Information NSW for registering your Power of Attorney. Where should I keep my Power of Attorney? It is important to store your Power of Attorney in a safe place and provide your attorney with a copy. You should also provide a copy to anyone else who needs to know its contents, such as your solicitor or accountant. When you make a Power of Attorney with NSW Trustee & Guardian, your original Power of Attorney document is held free of charge in our fireproof safe. You will receive a copy for your records. This ensures that your Power of Attorney will not be misplaced and will be easy to locate when it is required. 14

15 How do I cancel (revoke) a Power of Attorney? You can revoke a Power of Attorney at any time providing you are capable of understanding what you are doing. To revoke a Power of Attorney you must inform your attorney in writing that you are bringing their appointment to an end. Should you fail to inform your attorney of the revocation your attorney can legally continue to make decisions on your behalf. Your bank and any other relevant groups or businesses with which your attorney may have been dealing should be notified of the revocation. After revoking the Power of Attorney you should destroy the original and any copies of the attorney document you may have. What other pre-planning documents should I consider? Enduring Guardianship An Enduring Guardian is someone you choose to make personal or lifestyle decisions on your behalf when you are not capable of doing this for yourself. Should you require someone to make decisions relating to where you live, who you live with, medical treatment and the health care you receive, and daily issues like diet and dress, you will need to appoint an Enduring Guardian. A separate document is required to do this and can be obtained from the Guardianship Division of the NSW Civil & Administrative Tribunal, telephone (02) or from their website Advance Care Directives An advance care directive (sometimes called a Living Will ) is a way of recording your wishes or instructions for any future medical intervention and treatment for doctors and health care workers. It can only be used if you have lost capacity or are unable to communicate. For more information visit the Planning Ahead Tools website 15

16 Services Will Making Will Safe Storage Power of Attorney Enduring Guardianship Trusts Deceased Estate Administration Financial Management Services Contact our friendly staff to make your Power of Attorney appointment. Branches Armidale Bankstown Bathurst Broken Hill Burwood Chatswood Gosford Hurstville Lismore Liverpool Miranda Newcastle Parramatta Penrith Port Macquarie Sydney CBD Wagga Wagga Wollongong There is an agent for NSW Trustee & Guardian at every Local Court in NSW. Contact us (local call cost only) NSW Trustee & Guardian 2015 V7 12/15 16