What are Powers of Attorney?
Written by: Karlene Wightman l Legal Team
Put simply, Powers of Attorney are documents appointing a person or persons to act for you while you are alive, but most commonly, when you have lost your own mental capacity to make decisions for yourself. Briefly, there are two types of Powers of Attorney:
Enduring Power of Attorney has two facets:
- Financial Power of Attorney: this allows someone else to make financial decisions on your behalf. This power can commence (a) immediately or (b) when you cease to have your own mental capacity to make decisions. You can appoint up to four people in various configurations, all of which would be discussed with you at the time of making the document.
- Personal Power of Attorney: this allows someone else to make lifestyle decisions on your behalf. Examples of such decisions could be where you live, who you live with, who sees you, who doesn’t see you (basically all decisions that would be made by an adult in respect to a minor child). Usually, the person you choose to make your financial decisions will also be appointed to make your personal lifestyle decisions. However, this is not always the case and can be dealt with differently in the document.
Appointment of Medical Treatment Decision Maker
An Appointment of Medical Treatment Decision Maker allows you to appoint up to four people (labelled as decision maker 1, 2, 3, 4 respectively) who will make decisions for you only if you have lost the capacity to make decisions for yourself. These decisions are limited to medical in nature, for example: do you stay on life support, have a particular surgery, blood transfusion or receive particular medication).
If you do not have an Appointment of Medical Treatment Decision Maker, the legislation sets out who can make the decision for you. It could be the case that you are happy with the legislative order. However, this does not suit many people, thus making this Power of Attorney extremely important.
Your Legal Documents + The Importance of Powers of Attorney
Many people make an appointment to see a Wills and Estates Lawyer because they want to ensure that their assets are protected and distributed in accordance with their wishes when they die. Many people do not/have not considered the implications if something was to happen to them while they are alive and, most commonly, lose their mental capacity to make appropriate decisions for themselves.
There are a few different scenarios that come to mind that really emphasise the importance of having Powers of Attorney, so let’s go through them to give you a better and someone clearer understanding…
Scenario One
Part of our Estate planning process is to discuss both Wills and Powers of Attorney when a person makes an appointment. It is sometimes the case that the necessity of Powers of Attorney is misunderstood or there is a general feeling that you are giving away control of your finances or decision-making capacity while you are alive.
This is more often the case with people who are ‘young, fit and healthy’. However, our advice would be that having Powers of Attorney is like having life insurance – a contingency plan for a need that may not ever eventuate.
An example of this occurring is if a person is involved in a ‘freak’ accident and ends up in hospital (perhaps unconscious or on life support). There are not only medical decisions that need to be made, but that person probably also has bills (mortgage, rent etc.) to be paid. Without an Enduring Power of Attorney, no one has the authority to continue to pay these bills or organise the persons’ life. It can also be the case that the person owns/operates their own business. This puts another facet to the need for an Enduring Power of Attorney.
Scenario Two
Another scenario is, most commonly, an elderly person who has lost capacity because of dementia or a similar diagnosis. Unfortunately, we someone see situations where elderly people are manipulated or taken advantage of (not necessarily by family members) and do not have a firm understanding of what they are doing. It is easy for the elderly to be convinced to make donations, buy items for a friend or friends or simply give money when asked.
If there is no Enduring Power of Attorney in place, it is difficult for the family to step in and relationships can really break down under these circumstances.
Legal Issues If There Are No Powers of Attorney In Place + Can Anything Be Done?
If there are no Powers of Attorney in place and the person needs or wants one still has the medical capacity, it is as simple as attending our office to provide instructions and complete the necessary documentation.
Things get more complicated if the person has lost their capacity. We, as solicitors, often receive phone calls from children whose parents have lost the capacity to have no Power of Attorney in place. If the children can prove that their parent does not have their own mental capacity to make decisions for themselves, an application to VCT can be made.
Legal Documents For A VCAT Application
The first thing to do is to submit an application to VCAT on behalf of the person who does not have the capacity. A series of questions need to be completed, and medical evidence is required. All ‘interested parties’ (most commonly spouse and children) need to be made aware of the application.
VCAT then sets a date for the matter to be heard. All interested parties can attend. If all parties agree on who should be appointed, and there is clearly a need for the appointment, VCAT will usually make the order without any fuss. However, as all family dynamics are different, if there are issues among the family and children, for example, cannot agree on who should be appointed, then VCAT needs to make that decision.
Inevitably, someone will be unhappy and in extreme cases where the family are unable to get along (to the detriment of the person subject to the VCAT order), VCAT will sometimes appoint a trustee company. This costs money and is usually not what is best.
Canny Legal, Your Powers of Attorney + Our Legal Services
Making sure that Powers of Attorney are in place, means that you have the choice and control of who is appointed to this role. The alternative is leaving the decision to VCAT, which may not be what you want.
The other downside is that it can take a number of months to be heard by VCAT, which can leave the person in limbo until the matter is sorted!
So, do you need Powers of Attorney? The short answer is YES!
Although often considered to be only necessary for the elderly, Powers of Attorney provide the authority for another person to act on your behalf, should you be unable to do so yourself, and are useful documents for all adults as none of us are immune from accidents, illness or absences. Canny Legal have a team ready to ensure that your Powers of Attorney are executed correctly so that should anything happen, your mind is at ease.
Get in touch with our team to have a chat with one of our Lawyers about how we can help you.
