Estate Planning Essentials - Power of Attorney

Posted by Malcolm Campbell on 11 October 2017
Estate Planning Essentials - Power of Attorney

A Power of Attorney is a formal appointment by which a person (called the Principal) gives the right and authority to another person (the Attorney) to act on behalf of the Principal in relation to his/her financial matters.            




The power can be either a:

  • General power to undertake any activity and enter into any transaction which the Principal could do without any limitation; or

  • Specific or limited power to enter into a particular transaction such as the sale or purchase of a house or to operate a particular bank account. Where it involves real estate transactions, the Power of Attorney must be registered with the Department of Land Property Information (LPI)

A person who wishes to appoint an attorney must be mentally capable of understanding the nature and effect of the document that he or she is signing. A Power of Attorney signed by someone who lacks the required mental capacity at the time of signing is void and of no effect.

Significant changes to the law affecting Powers of Attorney came into effect from 1 March 1985. A Power of Attorney made before 1 March 1985 was rendered ineffectual if the person giving the Power of Attorney subsequently became mentally ill or of unsound mind. A Power of Attorney made after 1 March 1985 continues to be effective notwithstanding that the Principal subsequently suffers loss of capacity through unsoundness of mind if the Power of Attorney is an Enduring Power of Attorney. This means that the Principal's signature is witnessed by a "prescribed person" who also endorses a certificate stating that he or she has explained the effect of the document to the Principal before it was signed. The prescribed person should be a solicitor, barrister or clerk of the Local Court.

A Power of Attorney may be revoked by the Principal at any time while they are of sound mind and will automatically cease upon the death of the Principal. To revoke the Power of Attorney the Principal should give written notice to the Attorney and if the Power of Attorney was registered, a written revocation should also be registered. Where a Power of Attorney is given in the form of a deed and is expressed to be irrevocable, it cannot be revoked. If a Power of Attorney has been given for a fixed period, the Attorney's authority ceases when that period ends.

An Attorney acting under a Power of Attorney is fundamentally acting as an agent of the Principal and, as such, owes certain duties to the Principal. These duties include: not exceeding the authority conferred by the Power of Attorney; confidentiality regarding the Principal's affairs; and avoiding any interest which may conflict with his or her duty to the Principal.

You can appoint one or more persons as your Attorney and if more than one is appointed, you can direct them to act jointly (where they must agree on all decisions), severally (where each Attorney can make decisions separately from the others), or jointly and severally (the Attorneys can act together or separately).

The person/s appointed to be an Attorney must be:

  • at least 18 years old

  • someone that you trust to make decisions in your best interest

You may appoint more than one person to act as your attorney.

If you appoint more than one person you can choose for their powers to operate jointly (both must sign all documents in order for them to be considered executed under the Power of Attorney) or severally (a document is executed if signed by one attorney only)

Cancelling a Power of Attorney

The best way is to confirm the revocation of the Power of Attorney in writing. We recommend the completion and execution of the appropriate form as prescribed in the relevant State/Territory legislation.

If you do cancel a Power of Attorney, make sure you destroy all copies of the document. Don't forget to tell your banks or other agencies that have dealt with the Attorney. It is also possible for a Court or Tribunal to cancel a Power of Attorney, when it is not being used in your best interests.

Changing a Power of Attorney

If you want to change your Power of Attorney, the easiest way is to prepare a new Power of Attorney and to formally revoke the old one in writing. You can make changes to your original, but they would have to be initialled and witnessed which may result in the document becoming unclear and confusing.