Huonville: Ph: Hobart: Ph:

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1 Powers of Attorney Huonville: 8/16 Main St, Huonville 7109 DX 70754, Huonville PO Box 239, Huonville 7109 Ph: Hobart: Level 1, 18 Elizabeth St, Hobart 7000 DX 231, Hobart GPO Box 16, Hobart 7001 Ph: ABN Fax:

2 Contents What if?... 3 What if I do not have a Power of Attorney when I need one?... 3 Is a Power Of Attorney better than an Administrator?... 4 What Sort of Power of Attorney?... 4 Who can I Choose as Attorney?... 5 What is the responsibility of the Attorney?... 5 How much control will my Attorney have?... 6 How can I limit the Attorney s power?... 6 Are there automatic limits on the Power?... 7 If I have an Attorney can I still make my own decisions?... 7 Is my Attorney liable for breach of obligations?... 8 Is an Attorney liable for debts?... 8 When can the Attorney start work?... 8 Can the Power be withdrawn?... 9 How does an Attorney complete documents?... 9 Does my Attorney charge a fee? Can I appoint more than one Attorney? What if capacity to give a Power of Attorney is uncertain? What if illness or infirmity means I cannot sign properly? What if I become too ill to understand such matters? Do Powers of Attorney work nationwide? What does a Power of Attorney Cost? How do I give a Power of Attorney?

3 What if? If you were to fall seriously ill, by a stroke for instance, what would happen to your affairs? If you are lying unconscious in a hospital bed who would deal with your finances? How would documents be signed? How would your bank account be operated? You can authorise someone else to deal with your affairs by giving specific authorities, say to operate a bank account or deal with social security. You could also give a general authority to deal with your affairs. This can be done by a written authority appointing someone as your attorney. A Power of Attorney will authorise another person to act on your behalf. People often give a Power of Attorney to someone they trust while they are in hospital or if they will be overseas for a period of time. The person who gives the power is called the Donor or Grantor. The person who receives the power is called the Attorney, Donee or Grantee. Some people put in place a Power of Attorney as a precaution to protect against the possibility of becoming incapable of handling their own affairs, particularly if you are infirm or elderly. What if I do not have a Power of Attorney when I need one? If you do become incapable of handling your affairs and have made no provision for a period of incapacity, general authority to act on your behalf can be given by a government body, the Guardianship and Administration Board. Application can be made by an interested party to have a person appointed as administrator to take control of your affairs for your benefit. The powers given to an Administrator depend on the order made by the board. An Administrator has wide powers to deal with the represented person s property and finances including the power to sell property, make investments, settle debts and so on. The Guardianship and Administration Board may limit the general powers of an administrator and direct that the represented person continue to be responsible for a particular part of his or her property, e.g. operate a savings account. 3

4 The Guardianship and Administration Board will require medical advice to confirm that you have lost the capacity to manage your affairs prior to appointing an Administrator. They will apply the minimal intervention to preserve your best interest. The appointment of an Administrator is a relatively inexpensive, informal exercise. There may be some delay in putting the arrangements into place but there is provision for urgent relief for urgent matters. We have another booklet that deals in detail with managing the affairs of someone who is incapable. Is a Power Of Attorney better than an Administrator? There are specific advantages and disadvantages of a Power Of Attorney and an Administrator. For many people, the potential for the appointment of an Administrator is a sufficient provision against the remote possibility of incapacity. Relying on the possible appointment of an Administrator avoids the cost of a power of attorney but does not have the certainty of having arrangement in place of your choosing. The Guardianship and Administration Board and the appointed Administrator make the decisions not you. Relying on the appointment of an Administrator may be more flexible than putting in place a Power Of Attorney. The Guardianship and Administration Board are available to appoint someone as and when and if you need assistance. The Guardianship and Administration Board can tailor assistance to what is appropriate when you need it. A power of attorney requires you to look ahead and make decisions for an uncertain future. An Administrator is typically subject to better supervision than an Attorney. As we get older a power of attorney is more likely to be needed and our circumstances are likely to be more predictable. If you are in a long-standing trusting relationship, you are more likely to be comfortable with entrusting your spouse or partner with a Power of Attorney. What Sort of Power of Attorney? A standard Power of Attorney lapses with the incapacity of the person giving the power. Under a standard Power of Attorney, if you are not capable of conducting your affairs your attorney cannot not act for you. An application would need to be made for the Court or the Guardianship and Administration Board to appoint someone to administer your affairs. 4

5 Under an Enduring Power of Attorney, the power to act survives the incapacity of the person giving the power. For this reason most people will want to grant the power in the form of an Enduring Power of Attorney. Under a standard Power of Attorney the Attorney is not bound to take action. If it is too hard, the Attorney may refuse to act. This is not so under an Enduring Power of Attorney if the person giving the power has become incapable. In that situation the Attorney must act. The Attorney in such a case is like an executor of a Will and is bound to act as trustee to protect the best interest of the incapable person. There are special rules to make an Enduring Power of Attorney. Who can I Choose as Attorney? You should appoint someone you trust. Make sure your Attorney is willing to carry out the responsibilities under the power. An Attorney is bound to deal with his responsibilities with utmost good faith and tell you the nature and extent of any interest which may conflict with the duties under the power. Any capable adult can be an Attorney. You could appoint a trustee company or some other professional adviser. Professionals are likely to charge a fee. Find out the terms of the retainer. Professionals offer independence and expertise but will they be expert on the dynamics of your situation and family. Think twice before appointing a professional carer or health service provider as your Attorney. Your trusted spouse or partner is a common choice as Attorney. A Power of Attorney should not be given lightly. The Attorney has great power. The Attorney should be carefully selected and trustworthy. Often a trusted family member or friend is the best choice. Typically such persons do not charge a fee but consider leaving directions if there are likely to be significant expenses. What is the responsibility of the Attorney? Being an Attorney is a position of great trust and importance. An Attorney has a legal as well as a moral obligation to fulfill the role with high standards of care and honesty. The Attorney must not exceed the authority or directions given by the person giving the power. An Attorney is bound to fulfil the responsibilities as Attorney with utmost good faith. An Attorney is bound to avoid situations where his interests are in conflict with the person giving the power. 5

6 An Attorney must act in the interest of the person giving the power. Unless specifically authorised by the document, an Attorney cannot act for their own or someone else s benefit against the best interests of the person giving the power. This is so even if the person granting the power may have so acted. For instance, even if the person giving the power would have gifted money to someone in the family or the Attorney, the Attorney in the absence of some specific authorisation cannot apply funds against the best interest of person granting the power or for the Attorney s own benefit. A special clause would need to be included to do this. An Attorney should presume that the Donor has the capacity to make a particular decision until clearly this is not the case and respect the principal right to participate in decisions to the extent of their capacity. Incapacity does not lower a person s human worth and dignity of the claim for basic human rights. The Attorney must act prudently with the assets of the Donor and keep careful control of the finances. The Attorney of a disabled Donor must use the Donor s money to maximise the Donor s quality of life, not just maximise the Donor s wealth. Acting in the Donor s best interests obviously includes ensuring that he or she receives maximum income entitlements, that assets are prudently managed and debts and expenses are responsibly controlled. However, a good Attorney will allow expenses for the Donor for items that are not essential but may be enjoyable or enhance his or her comfort. Attorneys must keep reasonable records of dealings and transactions made under the power and keep their property separate from the Donor's property. The Attorney does not have any right to his/her inheritance before the Donor s death. How much control will my Attorney have? Once the power to make a decision begins, your Attorney will have full control over that decision unless you have explicitly limited that power in the document granting the Power of Attorney. How can I limit the Attorney s power? You can specify decisions that you do not want your Attorney to make. You can also include particular instructions about what you would like your Attorney to do. Your Attorney must always act in accordance with your instructions. The power given to the Attorney can be limited to operate only in certain areas or on certain events such as: 6

7 between specified dates; while you are overseas; for specific property; to do particular acts: such as sign a particular contract; or after you lose capacity to act for yourself. It is better not to place too many restrictions on your Attorney's power, as this may make it difficult for your Attorney to make decisions on your behalf. Are there automatic limits on the Power? The authority granted by a Power of Attorney is only over property, financial and business matters. The authority granted by a Power of Attorney does not extend beyond property, financial and business matters to matters of lifestyle and personal welfare or medical treatment. An Attorney is not entitled to give directions for instance as to which hospital a disabled person should use or what sort of medical treatment they should have. It is possible to appoint someone to act as what is called an Enduring Guardian to make those decisions, or a Guardian can be appointed by application to the Guardianship and Administration Tribunal. Alternatively, you can give written requests about your medical treatment. Tierney Law have more detailed information on authorities for lifestyle and personal welfare or medical treatment in another booklet. You cannot give your Attorney the power to make decisions about special personal matters, such as a decision about your Will, appointing someone as your Attorney, voting at elections, or consenting to adoption or marriage. If I have an Attorney can I still make my own decisions? The powers given to an Attorney to act for you are in addition to your own powers. While you continue to have capacity you still have the option to deal with your own affairs and make your own decisions. Your Attorney can also make binding decisions and make binding actions for you and you are answerable for those actions. Because you may be working together with your Attorney in this way it is important you work well together as a team. Remember that while you have the capacity you are the boss of the team. It is wise to have a clear understating with your Attorney about what you wish the Attorney to do and how you wish it to be done. 7

8 Many people giving a Power of Attorney limit the power to only start after written instruction or a doctor certificate of incapacity. Consider whether any such instructions need to be recorded as part of the grant of the Power of Attorney. A written protocol in some cases would be worthwhile. Check you do not create inflexibility. Your Attorney will need a detailed briefing of your affairs. The Attorney may need details of both personal and financial affairs. Tierney Law as part of their estate planning services provides Will makers with a summary form to give instructions to executors. Similar information may be needed by the Attorney. Is my Attorney liable for breach of obligations? An Attorney can be held responsible for the misuse of a Power of Attorney. The Court and the Guardianship and Administration Board have the power to protect the principal's interests. They may require a summary of actions, receipts and expenditure or more detailed accounts, and these may be audited. They may revoke an Attorney's powers. The Guardianship and Administration Board may require the Attorney to compensate the Donor for any losses. Is an Attorney liable for debts? An Attorney will not normally be held responsible for the debts and liabilities of the person giving the power. An Attorney may choose to become bound by giving a guarantee. An Attorney may become bound if the Attorney is careless in failing to make clear they are not acting for themselves but merely on behalf of the person giving the power. The Attorney does not have to pay the donor s bills and accounts out of his/her own pocket. If the donor has insufficient funds, the Attorney should inform the creditors of the donor s financial circumstances as soon as practical. When can the Attorney start work? The Power of Attorney must be registered before it can be activated by the Attorney. 8

9 The Power of Attorney may limit when the attorney may begin work, for instance until after a written direction from the person giving the power or when a doctor says that the donor has lost the ability to make financial decisions. Can the Power be withdrawn? The Court or Guardianship and Administration Board can withdraw the power granted to an Attorney at any time if they decide that is best. If an Attorney no longer wishes to be the Attorney or joint Attorneys cannot agree they can apply to the Guardianship and Administration Board. The attorney may need to continue to act until alternative arrangements are made. Whilst the Donor is capable, the Donor can withdraw the power granted to an Attorney at any time unless they have agreed otherwise. Verbal advice to an Attorney that their power is withdrawn is effective but it is best if this is confirmed in writing and the written document is registered. Family members and friends can also apply on behalf of a mentally incapacitated donor to the Guardianship and Administration Board for an administrator to be appointed if the Attorney has died is considered incapable or there are concerns about the financial management. How does an Attorney complete documents? Your Attorney needs to explain to others the Attorney s role when acting for you. People may ask your Attorney to demonstrate the Attorney s entitlement to act. They may be asked to show a copy of the Power of Attorney or specify the registration number. Attorneys execute (complete) documents for the donor in the ordinary way, but must note on the document that they are executing it as the donor's Attorney under Power of Attorney (eg. John Smith, by his duly appointed Attorney, Mary Jones). The typical way to reassure those dealing with the Attorney is to show a copy of the Power of Attorney with its registered number. They might ask for certification the power has not been withdrawn. In that event, the Attorney can add after the Attorney s signature a sentence to that effect. For example, signed as Attorney under Power of Attorney 22/2222, the Attorney certifying the power has not been withdrawn. When the Power of Attorney is first activated, it is sensible to advise those who you will have regular dealings, e.g. banks and government departments. They may have special procedures of their own that it is sensible to satisfy in advance of when needed. 9

10 Both the Attorney and the person giving the power are wise to have business like records of the authorities given and actions taken, a minute book type record for instance. As usual, recording arrangements in writing and, where necessary, both parties acknowledging them in writing, reduce the opportunities for confusion. Does my Attorney charge a fee? Unless otherwise agreed, the Attorney will be entitled to be reimbursed their expenses but there is no right for an Attorney to charge a fee or charge for their time and work. You should have written confirmation, if the Attorney is to be paid for their time and trouble. Can I appoint more than one Attorney? You may appoint two or more Attorneys to act either jointly (together), or as a majority (simple, two-thirds, etc) or severally (any one of your Attorneys can sign), or successively (power is given to a particular Attorney when the power given to another Attorney ends, or when the other Attorney is not available to make decisions). Joint Attorneys must make decisions unanimously and they have equal authority unless the document appointing the Attorneys provides otherwise. If one of multiple Attorneys dies, the remaining Attorneys exercise the power. Express your intentions clearly. Where there are several Attorneys, they must consult regularly. What if capacity to give a Power of Attorney is uncertain? If there is any possible dispute or doubt as to the capacity of the person granting the power, a doctor should confirm that the person is capable of understanding the document. What if illness or infirmity means I cannot sign properly? You do not need a legible signature to validly give a Power of Attorney. Any mark on the paper with a pen will suffice if it is intended as a signature. It is critical, however, that the person has sufficient understanding to have the capacity to grant the Power of Attorney. 10

11 What if I become too ill to understand such matters? If you cannot understand the nature and effect of the document, you cannot grant a Power of Attorney. If the only matters to be dealt with are with bank accounts or pension matters someone on your behalf may be able to get an authority to act on you behalf by application to the bank or Centrelink, without the need for a Power of Attorney. Do Powers of Attorney work nationwide? The law on Powers of Attorney varies from State to State. You cannot safely apply advice based on the laws of another state. If you wish to use the Power of Attorney for matters outside Tasmania, have it checked and if necessary registered in that other State. What does a Power of Attorney Cost? The cost of a Power of Attorney is $ for our fees plus $ GST. This is assuming less than an hour is required to prepare and complete the Power of Attorney and attend to have it registered. There is $90.50 in tax if the Power of Attorney is registered. The Power of Attorney must be registered before action can be taken under the Power of Attorney. Many people who prepare a Power of Attorney just in case it may be needed postpone registration until when and if action is needed under the Power of Attorney and thus postpone the tax on registration. If a husband and wife grant each other reciprocal power we only charge a single fee of $ plus $18.00 GST but each spouse need a separate Power of Attorney registered, each at $ in tax. How do I give a Power of Attorney? See Tierney Law. If necessary the document can be prepared and signed at a single appointment. It usually takes up to an hour to discuss, prepare and sign a Power of Attorney. This booklet is not a complete statement of the law. It does not deal comprehensively with your particular situation. This booklet is to provide general information to supplement our specific advice to you. Do not act in reliance on this booklet without our specific advice. We are responsible only if you give us specific instructions and for the specific advice we give. This booklet was originally prepared in 1995 and has been updated as at the 30 th August It does not reflect changes to the law after that date. You need to take specific advice on the possibility or effect of any such changes. 11