Q: My wife and I need to update our Wills, but we don’t see the need to legally or formally grant each other the power to act as each other’s Powers of Attorney. Our parents never did it and they successfully overcame any barrier. Should I be concerned about this?
A: Many of our clients work on the assumption that their spouse can make legal decisions on their behalf, enter into transactions (e.g. sell the family home), or even complete financial transactions (eg a withdrawal from your bank account). If this assumption was correct, then there would be no need for a Power of Attorney.
A Power of Attorney is a legal document appointing a person or trustee organisation of your choice, to manage your financial and legal affairs while you are alive. This person or organisation is then known as your attorney. For example, it is quite easy to appoint an attorney to act for you in a variety of circumstances such as if you are taking an extended interstate or overseas trip.
It important to be clear, that a Power of Attorney cannot make decisions for you in areas such as accommodation, health and services.
Your attorney can act immediately or for a time when you are no longer able to manage your own affairs. Your Power of Attorney can be enduring, which means it continues even if you have lost your legal capacity. An Enduring Power of Attorney gives someone authority to make decisions on your behalf once you are no longer capable to do so.
What happens if I don’t have an Enduring Power of Attorney in place?
Should you no longer be able to manage your financial affairs and you don’t have an Enduring Power of Attorney, NSW Civil & Administrative Tribunal (formerly the Guardianship Tribunal) may have to appoint a financial manager to make these decisions for you. This involves a formal hearing where evidence will be heard to assess whether you have lost legal capacity and whether you need to have someone appointed to make decisions on your behalf.
If NSW Civil & Administrative Tribunal decides that you need someone to make decisions about your finances and legal affairs, they will appoint a financial manager. While they have an obligation to take your views into account, the ultimate decision rests with the Tribunal.
The person or organisation appointed as your financial manager will not necessarily be whom you would have chosen. This may be stressful for those involved and can cause considerable conflict and anguish amongst family and friends. By making an Enduring Power of Attorney, you are ensuring that the person or organisation you nominate to manage your financial affairs is the person you want and trust, and most importantly that your family and friends understand that it was your decision.
For many of our clients, having a financial manager who is not a spouse, adult child, close family member or friend may be disconcerting. You might even make the assumption that if you are seeking to become the financial manager for your spouse, then you will secure this role outright. This is not always the case, and we are aware of cases where clients have found themselves in the situation by where they are making legal decisions about their spouse’s financial affairs in conjunction with the NSW Civil & Administrative Tribunal.
Having the peace of mind is important and avoiding considerable conflict and anguish amongst family and friends in your time of need should not be overshadowed by the cost involved. For the cost of a few hundred dollars, preparing an Enduring Power of Attorney and appointing an Enduring Guardian will avoid such complexity and loss of control outside of the family.