An Enduring Power of Attorney (EPOA) is an essential legal tool that allows you to appoint a trusted individual to manage your financial and legal affairs, even if you lose mental capacity. By having an EPOA, you have peace of mind knowing that someone who has your best interest in mind can make critical decisions on your behalf.
At CM Lawyers, we understand the legal process of obtaining an EPOA and would like to offer some tips to help you. This article explores key information you need to know about establishing an EPOA, along with practical advice for navigating this important document.
What is an Enduring Power of Attorney?
An EPOA is a legal document that enables a principal (the person making the appointment) to give authority to an attorney (the appointed person) to make financial and legal decisions on their behalf. Unlike a Lasting Power of Attorney, which is commonly used in other jurisdictions, an Enduring Power of Attorney in NSW remains in effect even if the principal can no longer make decisions for themselves. However, it automatically ends upon the principal's death.
Why You Need an Enduring Power of Attorney
Many people assume that a spouse or family member will automatically be able to manage their financial affairs if they become incapacitated, but this is not the case. Without an EPOA, a court or tribunal may need to appoint a financial manager, which can be time-consuming and costly.
An EPOA can be beneficial in various situations, such as:
- Temporary incapacity due to injury or illness
- Permanent cognitive decline, such as dementia or Alzheimer’s disease
- Managing assets while traveling or living abroad
What an Enduring Power of Attorney Covers
An EPOA in NSW grants the attorney authority over financial and legal matters, including:
- Managing bank accounts
- Paying bills and debts
- Buying and selling property
- Managing investments
- Signing contracts on behalf of the principal
It is important to note that an EPOA does not grant authority over medical or lifestyle decisions. These require a separate document known as a Power of Attorney for Medical Decisions or an Enduring Guardianship document.
How to Create an Enduring Power of Attorney in NSW
The process of establishing an EPOA involves several steps:
- Choose Your Attorney Wisely
Your attorney should be someone you trust completely, as they will have control over your financial affairs. Suitable candidates include family members, close friends, solicitors, or professional trustees. Consider their ability to make sound financial decisions and their willingness to take on the responsibility. - Determine the Scope of Authority
You can specify whether your attorney has full authority over all financial matters or limited authority for specific transactions. Additionally, you can appoint multiple attorneys to act jointly (together) or jointly and severally (individually or together). - Complete the Enduring Power of Attorney Form
The official Enduring Power of Attorney Form must be filled out, specifying the details of the attorney(s) and any conditions or limitations. This document must be signed and dated by both the principal and the attorney(s). The Power of Attorney Paperwork is critical to ensuring your attorney has the correct legal standing to act on your behalf. - Have the Document Witnessed
In NSW, an EPOA must be witnessed by a prescribed witness, such as:
- A solicitor or barrister
- A registrar of the NSW Local Court
- A licensed conveyancer who has completed an approved course
- A legal practitioner qualified in another country
- An employee of NSW Trustee and Guardian who has completed an approved course
The witness must certify that the principal understands the nature and effect of the EPOA. - Register the Power of Attorney (If Required)
Although registration is not mandatory, if the attorney needs to manage real estate transactions, the EPOA must be registered with NSW Land Registry Services.
Responsibilities and Duties of an Attorney
Once appointed, an attorney must act in the best interests of the principal and adhere to legal responsibilities, including:
- Avoiding conflicts of interest
- Keeping accurate financial records
- Keeping their personal finances separate from the principal’s
- Not benefiting personally unless explicitly authorised
Enduring Guardianship and Enduring Power of Guardianship
In addition to an EPOA, individuals may need an Enduring Guardianship document to appoint a guardian for health and lifestyle decisions. An Enduring Power of Guardianship ensures that someone you trust can make medical and personal care decisions on your behalf if you lose capacity. Unlike an EPOA, which focuses on financial matters, an Enduring Power of Guardianship covers decisions such as where you live, what medical treatment you receive, and personal services you require.
Cancelling or Revoking an Enduring Power of Attorney
A principal can revoke an EPOA at any time, provided they have mental capacity. To do so, they must notify the attorney in writing and, if the EPOA was registered, file a revocation with NSW Land Registry Services. If an attorney misuses their authority, concerned parties can report them to the NSW Civil & Administrative Tribunal (NCAT) for review.
Practical Tips for Setting Up an Enduring Power of Attorney
To ensure your EPOA is effective and protects your best interests, consider the following tips:
- Communicate Clearly: Discuss your wishes and expectations with your chosen attorney in advance to avoid misunderstandings.
- Set Specific Limitations: If you don’t want your attorney to handle certain financial matters, outline clear restrictions in the document.
- Keep Records Updated: Store your Power of Attorney Paperwork in a safe place and provide copies to relevant parties, such as your solicitor or financial institution.
- Review Regularly: Your circumstances may change over time. Periodically review and update your EPOA to ensure it still aligns with your needs.
- Seek Legal Advice: Consulting an estate planning lawyer can help ensure your EPOA is properly drafted and legally sound.
Final Thoughts
An Enduring Power of Attorney is a crucial estate planning tool that provides financial security and peace of mind. By selecting the right attorney and clearly defining their authority, you can ensure your financial affairs are managed according to your wishes, even if you become unable to make decisions yourself. Additionally, establishing an Enduring Guardianship or Enduring Power of Guardianship ensures that personal and medical decisions are handled appropriately.
For professional guidance in drafting an EPOA tailored to your needs, don’t hesitate to reach out to CM Lawyers. Our experienced team can help you draft an EPOA and Enduring Guardianship that reflect your wishes and comply with legal requirements. Contact us today so we can discuss how to safeguard your future.
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