Powers Of Attorney

What is a Power of Attorney?

A power of attorney is a legal document made by one person, who is called the ‘principal’,

that allows another person to act on behalf of the principal eg. do things with the principal’s money, bank accounts, shares, real estate and other assets. This can include spending and managing the principal’s money, buying or selling shares for the principal or buying, selling, leasing or mortgaging the principal’s house or other real estate. The person who does these things for the principal is called the ‘attorney’.

A principal is sometimes called the ‘donor’ and an attorney is sometimes called ‘the donee’.


Who can be appointed as an attorney?

The person appointed as attorney can be any person over the age of 18 years who is able to assist the principal with money or property such as a relative, friend or professional adviser.


Two Types Of Power of Attorney

There are two types of powers of attorney:

  • General Power of Attorney (also called an ordinary power of attorney); and
  • Enduring Power of Attorney.

The main differences relate to how the Powers of Attorney must be witnessed and under what circumstances they no-longer have effect.

There is a particular form that must be used to create a Power of Attorney and the same form can be used to create both types.


General (or ordinary) Power of  Attorney

A General (or ordinary) Power of Attorney will terminate if the principal loses mental capacity.

It is useful for a short term appointment if, for example, the principal is going overseas for a short period, but is not ideal if you want the arrangement to be permanent.

To make an Ordinary Power of Attorney the principal’s signature needs to be witnessed by any person over the age of 18 (other than the attorney being appointed).


An Enduring Power of Attorney

An Enduring Power of Attorney continues to operate after the principal has lost mental capacity.

It can be made on the same form as an Ordinary Power of Attorney but has some extra  requirements including;

  • It must say that the principal wants it to continue after they have lost mental capacity.
  •  The attorney has to sign the form to show that they consents to act. This can be at the same time as the principal signs or at a later time. The Enduring Power of Attorney will not begin to operate until the attorney has signed. (This is not required for an Ordinary Power of Attorney).
  • The principal’s signature must be witnessed by a special witness (called a ‘prescribed witness’ such as a conveyancer).
  • The prescribed witness must sign a certificate on the form stating that they explained the Enduring Power of Attorney to the principal and that the principal appeared to understand it.

A  ‘prescribed witness’ is:

  • a solicitor, barrister, Registrar of a Local Court; or
  • a licensed conveyancer, employee of the PublicTrustee or employee of a trustee company who has completed an approved course of study.


When Should You Make a Power of Attorney?

It is important to make a Power of Attorney before you need it, especially for an Enduring

Power of Attorney. Once you have lost your mental capacity, you cannot make a Power of Attorney because for a Power of Attorney to be legally binding you must be able to fully understand what you are signing.

A Power of Attorney usually starts as soon as it is signed and given to the attorney. However, if you want it to start at a later time you can record this on the Power of Attorney.

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If you have any questions on Powers of Attorney please call Property Platinum Law.


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