By Anna Hacker, Accredited Specialist – Wills & Estates, National Manager, Estate Planning, Australian Unity Trustees Legal Services
When people consider estate planning they often only think about what happens after they pass away but ensuring they are protected during their lifetime if they lose capacity is just as important.
The best way to ensure you will be protected is to have valid enduring powers of attorney in place.
Recent Case – How Much Power Does an Attorney Get?
The recent case of Re Narumon Pty Ltd  QSC 185 found that an attorney had the power to confirm an existing binding death benefit nomination for a self managed superannuation fund, a question long considered by the legal profession and superannuation fund members.
This confirms that the power of an attorney does extend to this role while the Court was not willing to extend it further to varying the terms of the binding death benefit nomination.
This case highlighted the potential for conflict in this role if an attorney has to consider their own interests and other possible beneficiaries when confirming (or not confirming) a binding death benefit nomination.
While this case did not expand its consideration beyond the role of the attorney for a binding death benefit nomination, it is not unreasonable to think that this case is the first of many related to the reach of an attorney’s power in relation to self managed superannuation funds, and superannuation in general, as well as trusts.
It is therefore vital for anyone appointing an attorney to consider whether they want that person or persons to have significant control over not only their personal assets but also assets that are technically outside of their personal wealth such as superannuation.
Recent changes to state-based rules
Each state has very specific legislation when it come so to enduring powers of attorney and how those documents can be prepared. Each state is also unique in the way in which attorneys are appointed and all documents are different. While they are all legally allowed to be used in all states, if you have assets in a particular jurisdiction, it is a good idea to ensure the documents you have in place will actually be appropriate to deal with those particular assets.
Victoria recently had a change of documentation and the enduring power of attorney (medical treatment) was replaced with an advance care directive, similar to those in the Australian Capital Territory, Queensland and Western Australia.
The older documents are still valid but the new ones allow for greater clarity around end of life decisions and medical wishes. They also must be completed by a medical practitioner, rather than a lawyer.
In addition, Victoria replaced the older enduring power of attorney (financial) and appointment of enduring guardian with a single document - the enduring power of attorney. This allows a person to appoint a financial and a personal attorney, effectively replacing the previous roles with new names.
Each state has different legislation, and documents have been updated recently in a number of states.
Five of the biggest mistakes people make with enduring powers of attorney
What is an enduring power of attorney?
An enduring power of attorney is a formal instrument by which one person empowers another person to act on their behalf for certain legal and financial purposes (e.g. dealing with bank accounts, transferring money, paying bills, dealing with investments, or buying and selling real estate) when they are unable to manage their own affairs.
For example, you might be unavailable to make financial decisions or you may be unable to manage your finances due to serious illness or accident, or loss of capacity.
An enduring power of attorney will give that person the authority to act on your behalf.
You can appoint an attorney for a limited period, or an indefinite period. The latter applies until you pass away or act to revoke it.
A ‘general’ power of attorney ceases to be valid when the person who donated the power loses capacity to manage their own legal and financial affairs.
An ‘enduring’ power of attorney is required should you suffer loss of mental capacity
For a power of attorney to remain valid after you lose your mental capacity, you must make an ‘enduring’ power of attorney while you still retain mental capacity.
An enduring power of attorney is an important consideration for everyone, not just people who are older or with a known illness that may affect mental capacity.
For example, if you have an accident or a sudden illness that causes you to lose capacity to manage your financial affairs, no one will be able to access your assets on your behalf, such as your bank account or superannuation, unless you have an enduring power of attorney and ensure your needs and wishes are paramount and taken into consideration as financial decisions are made.
Your investments may require an important action to be taken, but you might not be in a position to do so. A family member or a friend could apply to be appointed as your financial manager or administrator, either through a Civil and Administrative Tribunal or the Guardianship Board (depending on the State in which you live), but this could take considerable time.
It is therefore in your best interests to have already prepared an enduring power of attorney so that the appropriate actions can be made in a timely manner.
Who can you appoint as your attorney?
Your attorney has full authority to deal with your legal and financial affairs and you should appoint someone you trust. Most people chose either a family member or close friend or a trustee company (such as Australian Unity Trustees Ltd) to act as their attorney.