Managing Relationships (from a legal point of view) Part 4 by Peter Nevile

Powers of Attorney

A man was sitting on his couch, drinking a can of beer watching sport on television. In an unusually reflective and communicative moment, he said to his wife, that he never wanted to live in a vegetative state dependent on some machine, relying on fluids from a bottle. "If that ever happens, just pull the plug With that, his wife turned off the television and threw out all his beer.

Now you would probably agree that such behaviour constitutes an understandable and probably justifiable reason, at least in the minds of most male readers, to bring the relationship to an abrupt end. However, as far as I know, this is not a true story but as good an introduction to the topic of Powers of Attorney as I
know. We often hear stories of people faced with moral and sometimes religious dilemmas about turning off life
support to allow someone they love, or for whom they have a responsibility, to die with some last vestigeof dignity. Happily most of us are going to grow to an even older age than previous generations, butdelayed death brings with it a whole host of issues relating to both our financial and medical wellbeing.

Situations arise in our daily lives where the ability to allow someone else to make decisions on our behalf
is convenient for a variety of reasons and makes good sense. It is a good idea to be aware of the
advantages and disadvantages of delegating Powers of Attorney.

Powers of Attorney are documents that allow other people, you select, to make specific or even general decisions on your behalf and hopefully in your best interests. Their decisions are often subject to conditions specified by you and to some extent governed by legislation. It is probably stating the obvious to
suggest that you think very carefully about the person to whom you wish to entrust your life and/or your financial wellbeing.

These are the types which are likely to be most useful to you:

General Power of Attorney
In essence giving someone a General Power of Attorney means that that person can make any decisions you are able to make, provided you still have mental capacity and are alive. (Lucid and Functioning) They can sign on your bank account, buy or sell shares in your name, sell your house, borrow money and make
a myriad of other potentially life changing decisions in your name and on your behalf. Be very careful about giving such wide powers!

Limited Power of Attorney
In many cases a Limited Power of Attorney makes more sense than a General Power of Attorney. For example, if you are going overseas and want someone to pay your bills, sell your house, complete some specific transactions or simply make decisions on your behalf about unexpected but specific and defined
circumstances that arise in your absence, then a Limited Power of Attorney is appropriate. You can specify exactly what your attorney is authorized to do, for how long and how much and no more. This Power also ceases upon your mental incapacity or death.There are other scenarios where you may sensibly wish for someone to make decisions on your behalf when you no longer have the mental capacity to do so. However you need to be aware that the law, has a strict interpretation of mental incapacity. In reality, it applies to people with demonstrable medical conditions such as Dementia and Alzheimer's disease or people who do not understand the nature and effect of what they are doing In these circumstances it is generally more appropriate to give specific Powers of Attorney which are called Enduring Powers of Attorney.

These Powers of Attorney continue notwithstanding the mental incapacity which would ordinarily terminate a Power of Attorney. I strongly recommend you include instructions to make these Enduring Powers of Attorney when you are making or reviewing your Wills.

The form in which these Powers are created and witnessed is quite specific and must be followed strictly in order for the Powers to be valid. The legislation creating the Powers also imposes clear fiduciary responsibilities and obligations on the person or persons you appoint, to ensure that they act honestly and in your best interests. The legislation also provides ready and reasonably inexpensive access, in the State
of Victoria, to the judicial system or courts through the Victorian Civil and Administrative Tribunal (VCAT) for anyone who believes the attorney is not acting properly in the exercise of the Enduring Power of Attorney.

Enduring Power of Attorney (Financial)

Enduring Power of Attorney regarding financial affairs is like a General Power but relates to your financial affairs. You may impose conditions and limits, including when it is to start and who may hold the Power.

There is also provision for the appointment of a substitute person if the nominated person is unable to act. Enduring Power of Attorney (Medical Treatment) This allows someone to make decisions about your medical treatment when you no longer have the mental capacity (which is defined as legal capacity) to do so. This includes the 'turn the switch off decision" subject to the local laws. I need hardly add …think very carefully about this one.

Finally you may be interested to know that having made the decision to grant any or all of these powers to someone, you may change your mind and revoke them while you have mental/legal capacity. If you are wanting to go down this track I recommend you have both the Powers of Attorney and any Deed of
Revocation prepared by a lawyer.

There is an old legal maxim which applies equally to non lawyers in these situations. "He who acts for himself has a fool for a client" In the next article I plan to look at the impact a personal relationship change can have on the ownership of a business. I will cover the general issues and how to go about protecting yourself, or at least minimizing
the risk, going forward.


Nevile & Co. Solicitors
Level 11, 100 Collins Street
Melbourne VIC 3000
(03) 9664-4703

Keywords: Powers of Attorney