Power of Attorney FAQ - Australia-VIC

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Contents

General Information

What is a Power of Attorney?

A Power of Attorney is a document in which one person (the Donor) appoints another person (the Attorney) to act for him or her. There are many reasons why you might want to appoint someone else to look after your financial affairs. For example, if you are going to be out of the country for a lengthy period of time, you might want someone to do your banking while you are gone. If you are approaching old age, you may want to give a Power of Attorney to a person you trust so that he or she can manage your property for you.

What are the differences between enduring and ordinary Powers of Attorney?

There are two major types of Powers of Attorney: ordinary and enduring.

An ordinary Power of Attorney is only valid as long as the Donor is capable of acting for him or herself. If the Donor dies or becomes mentally incompetent, the Power of Attorney is invalidated.

An Enduring Power of Attorney remains valid even if the Donor later becomes mentally incompetent. (Note: the Donor must be competent at the time the Power of Attorney is made.)

In either case, the Power of Attorney becomes invalid when the Donor dies. A Power of Attorney cannot be used to bequeath property upon the death of the Donor.

What are the differences between general and specific Powers of Attorney?

A general Power of Attorney is one that gives the Attorney the authority to do anything the Donor could do him or herself. A specific Power of Attorney is one that gives the Attorney authority to act for a particular purpose. (For example: to buy or sell a particular piece of property.)

Will a Power of Attorney still be valid after the Donor dies?

NO. Generally Speaking, when a person dies, the Executor (also called a "Personal Representative") appointed in the person's Last Will and Testament takes control of the deceased person's property and distributes it according to the instructions in the Will. If there is no Will (or if the Will is invalid), each jurisdiction has intestacy legislation that distributes the deceased person's property to his or her relatives according to a set of rules. A court generally appoints an Administrator to oversee this process. Unfortunately, the deceased person's wishes are not taken into account during the process (which can be very lengthy), since they have not been formally expressed in the proper manner.

Will a Power of Attorney allow me to appoint someone to make welfare and medical decisions on my behalf?

In most of Australia, powers of attorney do not give someone the right to make decisions about your welfare or medical treatment. Usually, a medical power of attorney or anticipatory directive is required to deal with non-financial matters. The exception to this rule is found in Australian Capital Territory and Queensland. In the Australian Capital Territory you can use your Enduring Power of Attorney to appoint someone to run your everyday affairs (other than property and money) and consent to medical treatment and medical donation while you are incapacitated. In Queensland you can use your Enduring Power of Attorney to appoint someone to make personal and health decisions when your capacity is impaired.

The Donor

Who is the Donor?

The Donor is the person who needs someone else to act for him or her. The Donor must be an adult. The Donor must be capable of making his or her own decisions at the time the Power of Attorney is executed (signed).

What is "incapacity"?

A person is incapable of managing property if the person is unable to understand information relevant to making a decision about the management of property, or if the person cannot appreciate the foreseeable consequences of making (or not making) a decision about the management of property.

The Attorney

Who is the Attorney?

The person appointed by the Donor is called the Attorney. The Attorney is the person who acts for the Donor.

Does the Attorney have to be a lawyer?

No, there is no need for the Attorney to be a lawyer. (See below for Attorney qualifications.)

What qualifications does an Attorney need to have?

The Attorney must be a capable adult. The Attorney cannot be an undischarged bankrupt. The Attorney should not be the owner, operator or employee of a nursing home or extended care facility in which the Donor is a resident.

What qualities should I look for in an Attorney?

Your Attorney must be someone whom you trust completely. In addition, remember that your Attorney will have complete authority to deal with your financial and legal affairs (subject to any limitations or restrictions specified in your Power of Attorney). You should ensure that the person you choose has adequate financial management skills and sufficient time to handle your affairs properly. Your Attorney must be available when required, be able to objectively make decisions and be able to keep accurate financial records.

What are the responsibilities of my Attorney?

Your Attorney has the following responsibilities:

  • to act in your best interest;
  • to keep accurate records of dealings/transaction undertaken on your behalf;
  • to act for you with the utmost good faith and to avoid situations where there is a conflict of interest; and
  • to keep your property and money separate from their own.

Is it okay to appoint a relative as Attorney?

Yes, people often appoint relatives as Attorneys.

Can my Attorney also be a beneficiary in my will?

Yes.

What are Joint or Joint & Several Attorneys?

Sometimes a Donor will want to appoint two Attorneys. In that case the Donor must decide whether the Attorneys will be 'joint' Attorneys or 'joint and several' Attorneys. Joint Attorneys must act together. They must both agree before any action can be taken, and they must both take the same action at the same time. If one is absent, no action can be taken. Joint and several Attorneys can act together or individually. Either one can take an action without consulting the other. If one is absent, the other can still act.


In Victoria, what is an Alternate/Substitute Attorney? Do I need one?

It is a good idea to appoint an alternate/substitute Attorney but it is not absolutely necessary. An alternate/substitute Attorney can only act when the Attorney is unable or unwilling to continue acting for the Donor. Note: A third party (e.g. the Donor’s bank) may require proof that the original Attorney is unable to continue as Attorney before accepting instructions from the alternate. Where two Attorneys have been appointed, the document may state that if one dies or is otherwise incapable of acting, the other will continue as sole.

Victoria: I am an Attorney. How should I sign documents on the Donor's behalf?

There is no one standard way for an Attorney to sign documents. However, when you do sign, it is important that you clearly state who the Donor is and that you are acting as their Attorney. One convention is to write the Donor's name, then sign your name, and then indicate that you are the Attorney. The following is an example:

John Johnson, by Jane Smith, Attorney.

You should always have a copy of the Power of Attorney with you whenever you are acting as an Attorney. You may be required to sign an affidavit stating that the Power of Attorney is valid, that it hasn't been revoked, and that the Donor is still alive. And remember: failure to comply with directions given by the Donor, without reasonable cause, can leave you subject to civil liability for any damages caused by noncompliance.

Place and Time

What is "Jurisdiction"?

A jurisdiction is a place that has its own laws. It is a territory with boundaries, such as a state or a province. For example, California is a jurisdiction in the United States, Ontario is a jurisdiction in Canada, Scotland is a jurisdiction in the United Kingdom and Queensland is a jurisdiction in Australia.

What is the "Governing Law"?

A Power of Attorney is governed by the law of the jurisdiction where the actions of the Attorney will be performed. Normally, this is the place in which the property of the Donor is located. Therefore, it is not a good idea to appoint an Attorney who resides in a different jurisdiction, unless the property or assets you want the Attorney to deal with are also in the different jurisdiction. If you anticipate that your Attorney will be acting in more than one jurisdiction, you should probably make separate Powers of Attorney for each jurisdiction.

Examples:

  • If your bank accounts and other property are located in the jurisdiction where you live, you will want to appoint an Attorney who lives in the same jurisdiction.
  • If you live in one jurisdiction but have a bank account or other property someplace else, and you want an Attorney to deal with that property, you will want to choose the place where the property is located as the governing law, and appoint an Attorney who is located in (or is willing to travel to) the same jurisdiction as the property.

When does a Power of Attorney start?

A Power of Attorney can start on a date specified in the document, or upon the occurrence of an event (such as disability or incompetence). If there is no specified date or event, a Power of Attorney starts immediately upon execution.

NOTE: In Victoria, an Enduring Power of Attorney does not confer authority until the Attorney signs the Statement of Acceptance.

How/when does a Power of Attorney end?

An ordinary Power of Attorney ends automatically when the Donor becomes mentally incapacitated or dies. An Enduring Power of Attorney ends automatically when the Donor dies. As long as you are mentally capable, you may revoke your Power of Attorney at any time by notifying your Attorney (in writing) that the Power is revoked and destroying the original Power of Attorney. Otherwise, a Power of Attorney continues in effect indefinitely, unless the document specifies an end date.

Can I revoke my Power of Attorney after I have become incompetent?

A person who is incompetent cannot revoke an Enduring Power of Attorney. However, an ordinary Power of Attorney is automatically revoked when the Donor is found to be incompetent.

How do I revoke my Power of Attorney?

You can revoke, or cancel, a Power of Attorney by giving your Attorney a written notice saying that his or her power has ended. Also, you may make a new Power of Attorney that states your previous Power of Attorney is now revoked (but you must still notify the previous Attorney of the revocation). Third parties (e.g., people or organisations that have been dealing with the Attorney) must also be notified. Additionally, if your Power of Attorney is registered you must also register the revocation.

Please note that if you fail to inform your attorney of the revocation, your Attorney can legally continue to make decisions on your behalf.

Powers

Should I put restrictions on my Attorney?

When you give a "general" Power of Attorney, you give your Attorney the authority to do anything you could do yourself, with a few exceptions - such as areas where you possess skills that your attorney doesn't (e.g. if you are a dentist, you cannot authorise your Attorney to practice dentistry on your behalf). But there may be some things you would prefer your Attorney did not do. For example, you may want to require that your Attorney get prior approval from you before signing cheques for large amounts on your account.

Should my Attorney be allowed to personally benefit from managing my assets?

If the person you are appointing as your Attorney is also a member of your family or a beneficiary in your will, you may want that person to be able to personally benefit from managing your assets, since you intend that person to become owner of the assets eventually. Generally, however, it is probably not a good idea to allow your Attorney to personally benefit from managing your assets as this creates a conflict of interest for your Attorney, who is legally obligated to act in your best interest, not his or her own best interest.

What can the Attorney do?

The Attorney may transact business respecting the Donor's property in all areas specified by the Donor.

Is the Attorney obligated to do anything?

Generally speaking, the Attorney is not obligated to act for the Donor. However, in some circumstances the Attorney may agree, in writing, to accept an obligation to take action when necessary. When the Attorney acts on behalf of the Donor, the Attorney must act in the best interest of the Donor.

Does my Attorney have the authority to act while I am still available and able to take care of my own finances?

Generally speaking, a Power of Attorney is effective as soon as it is executed (signed and witnessed, etc.) whether or not the Donor is available or able to handle his or her own affairs. However, the document might specify that it will only be effective under certain conditions. For example, some Powers of Attorney specify that they will not come into effect unless and until the Donor has become mentally incompetent to handle his or her own finances. Note: Some jurisdictions do not allow Powers of Attorney that commence upon the occurrence of a condition or event such as mental incapacity.


Signing Details

What does it mean to "execute" a document?

When a person "executes" a document, he or she signs it with the proper "formalities". For example: If there is a legal requirement that the signature on the document be witnessed, the person executes the document by signing it in the presence of the required number of witnesses.

How should I sign my Power of Attorney document?

To be valid, you must sign the document with your usual cheque signing signature. You should also initial each page of the document. The signing and the initialing of the pages must occur in the presence of your notary or witness(es).

After you have signed and initialed your document in front of your notary or witness(es), your notary or witness(es) must sign on the applicable page of the Power of Attorney and should initial each page. This must occur in your presence.

Can anybody act as a witness?

Your witness(es) cannot be your spouse, partner, child, your Attorney or alternate Attorney, or the spouse of your Attorney or alternate Attorney. Some jurisdictions disallow witnesses that are mentioned in your will, either as beneficiary or executor/executrix. You should generally avoid having witnesses that have any financial relationship with you. The witness(es) must be of legal age in your jurisdiction, they must have capacity and be mentally capable of managing their property and making their own decisions.

Who is authorised to witness statutory declarations in Victoria?

The following individuals are authorised to witness statutory declarations in Victoria:

  • A justice of the peace or a bail justice
  • A notary public
  • A barrister and solicitor of the Supreme Court
  • A clerk to a barrister and solicitor of the Supreme Court
  • The prothonotary or a deputy prothonotary of the Supreme Court, the registrar or a deputy registrar of the County Court, the Donor registrar of the Magistrates’ Court or a registrar or deputy registrar of the Magistrates’ Court
  • The registrar of probates or an assistant registrar of probates
  • The associate to a judge of the Supreme Court or of the County Court
  • The secretary of a master of the Supreme Court or of the County Court
  • A person registered as a patent attorney under Part XV of the Patents Act 1952 of the Commonwealth
  • A member of the police force
  • A sheriff or a deputy sheriff
  • A member or former member of either House of the Parliament of Victoria
  • A member or former member of either House of the Parliament of the Commonwealth
  • A councillor of a municipality
  • A senior officer of a council as defined in the Local Government Act 1989
  • A registered medical practitioner within the meaning of the Medical Practice Act 1994
  • A dentist
  • A veterinary practitioner
  • A pharmacist
  • A Donor in the teaching service
  • The manager of a bank
  • A member of the Institute of Chartered Accountants in Australia, the Australian Society of Accountants or the National Institute of Accountants
  • A secretary of a building society
  • A minister of religion authorised to celebrate marriages (not a civil celebrant)
  • A person employed under Part 3 of the Public Sector Management and Employment Act
  • 1998 with a classification that is prescribed as a classification to which this section applies or who holds office in a statutory authority with such a classification. This is a person who holds an office in the Victorian Public Service or a statutory authority that is prescribed as an office to which this section applies
  • A fellow of the Institute of Legal Executives (Victoria).

Does it matter where the Power of Attorney document is signed and witnessed?

If your document will be used in a different jurisdiction - but not in a foreign nation - there is no problem with having the document signed and witnessed where you live, rather than where the document will be used. The witnessing requirements (number of witnesses required, whether or not notarisation is needed) should still be those of the place where the Power of Attorney will be used, however.

Can I use my Power of Attorney in a different state/territory?

Some territories and states have mutual recognition provisions in their Power of Attorney legislation which provide portability of powers within Australia. Before trying to use a power of attorney created in a different jurisdiction review the legislation of the jurisdiction where you wish to use the power of attorney to ensure that your Power of Attorney will be accepted.

What if my Power of Attorney will be used in a foreign nation?

If your document is intended to be used in a foreign nation, you may have to have it "authenticated" or "legalised". This is a process whereby a government official (e.g., the Secretary of State, the Foreign Office, the Office of the Attorney General - depending on where you live) certifies that the signature of the authority (e.g., notary or solicitor) on your document is authentic and should be accepted in the foreign nation. For more information about document authentication and legalisation, contact the local consulate/embassy of the foreign country your document will be going to, or one of the following government web sites:

United States: http://www.state.gov/m/a/auth/

Australia: http://www.dfat.gov.au/brisbane/index.html

Other Considerations

Do I have to pay my Attorney?

Depending on the kind of relationship you have with the person who will be acting as your Attorney, you will have to consider whether they should be paid for their services. You can stipulate in your document that your Attorney will not receive any payment except the reimbursement of out-of-pocket expenses, or you can agree to pay your Attorney a specified amount. If you prefer, you can authorise your Attorney to pay him or herself a reasonable amount for acting for you. However, you do not need to pay your Attorney for the power to be effective. Generally, payment is only made when a trust company or other professional person/organisation is acting as your Attorney.

Should I have my Attorney prepare financial statements?

You can require your Attorney to prepare periodical financial statements and send them to your accountant, lawyer or some other person you choose. This is a good deal of work, however, and most people do not require it of unpaid Attorneys.

Note: Attorneys should keep records of their actions.

What are co-owned assets?

If your Attorney is a family member, you may be joint owners of property. It is important to state this in your document, so that third parties dealing with your Attorney understand that the Attorney is entitled to co-own assets with you. Otherwise, the co-owning of assets could give the impression of impropriety.

Do I have to record or register my Power of Attorney with the Land Titles Office?

Generally speaking, a Power of Attorney has to be registered with a land titles office/department if it could affect real property (land or other real estate). For example, if the Attorney is authorised to mortgage or sell the Donor's real estate, or to purchase real estate on behalf of the Donor, the Power of Attorney will probably have to be registered at the appropriate office. Usually there is a fee for registration of the document. Additionally some jurisdictions provide stricter registration requirements. In Tasmania, all Powers of Attorney (whether general or enduring) must be registered with the Recorder of Titles. In Northern Territory, all Enduring Powers of Attorney must be lodged at he Registrar-General’s Office.

Is any stamp duty payable on my Power of Attorney?

No stamp duty is payable on a Power of Attorney in Victoria.