Different types of Power of Attorney: which is right for you?

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There is a general degree of confusion between General Power of Attorney and Enduring Power of Attorney. It is important for these documents to be understood as impaired decision-making can have an adverse effect on the livelihood and life quality of an appointor.

Power of Attorney

A Power of Attorney allows a principal to appoint an attorney to make financial decisions on his, her or its behalf. The principal can be a person or a company. A Power of Attorney is not enduring in nature and once the principal loses capacity to make decisions, then the Power of Attorney ceases to have any effect.

Generally, a Power of Attorney is prepared if a principal is going overseas and needs an attorney to sign a contract or to complete a transaction while he or she is outside the jurisdiction. A Power of Attorney can also be prepared where there is a sole director company and it is important to consider who will handle the company’s affairs once the sole director has lost capacity or is unable to act.


Enduring Power of Attorney

An Enduring Power of Attorney allows a principal to appoint attorneys to make personal, health and financial decisions on his or her behalf. Importantly, an Enduring Power of Attorney continues to have effect even once a principal has lost capacity. As the document is enduring in nature, it is vital that a principal ensures he or she carefully considers who is appointed as an attorney. The main threshold in this respect is appointing someone they trust.

A principal is able to appoint different people for health decisions and for financial decisions. Personal and health decisions can only be made on the principal’s behalf once he or she has lost capacity. The power to make financial decisions can begin immediately, on a specified date or when the principal has lost capacity.

An Enduring Power of Attorney may address personal and health matters including:

  • where the principal should live
  • the principal’s diet and dress
  • whether to consent, refuse to consent or withdraw consent for particular types of health care

Financial matters include decisions such as:

  • buying or selling property
  • operating bank accounts
  • what investments are appropriate for principal with regard to the principal’s financial circumstances and needs.

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