A power of attorney is a legal document that allows another person, the attorney, to act on your behalf to make financial decisions for you. For example, an attorney may sell real estate, buy & sell shares or use money in your bank account to pay your medical bills.
It is crucial to make a power of attorney before you need it because once you have lost mental capacity you cannot make a power of attorney because, for it to be effective, you must be able to fully understand what you are signing.
Just picture this…
Your spouse suffers a stroke and is hospitalised. The medicos inform you that he is suffering from memory loss and the prognosis is not good. Some weeks later his condition worsens; he loses mental capacity and is transferred into full time care.
You live on a farm outside of town which you are now forced to sell to enable you to purchase a small unit in town to be close to your spouse and to also meet ongoing medical bills.
You make an appointment with a solicitor to affect the sale of the farm. The solicitor tells you that as you and your husband own the farm in joint names, both of you need to sign the necessary documents. You explain your husband’s situation to the solicitor, to which they reply; “that’s ok, we can exercise his Power of Attorney, so you can sign on his behalf”.
Your heart suddenly skips a beat as you realise that you and your husband never got around to getting that power of attorney organised after being prompted by your financial adviser every time you’ve seen them over the last half a dozen or so years.
In the above scenario, it is too late for the husband to get a power of attorney as he has lost mental capacity. The only way to sell the farm now is to make an application for the appointment of a Guardian through the Guardianship Tribunal. This process can take several months as the tribunal gathers all evidence, makes enquiries and holds a hearing in which a decision to appoint a Guardian is made.
All of this stress and running around, in a traumatic time of your life, could have easily been avoided by having an Enduring Power of Attorney in place.
An Enduring Power of Attorney provides you with the knowledge that your affairs will be managed by someone that you have chosen and can trust to act in your best interests. An Enduring Power of Attorney can commence immediately or on a pre-determined date in the future or alternatively, upon you losing mental capacity due to: dementia, Alzheimer’s, an accident or illness.
You should appoint someone you trust absolutely and your attorney must also:
- Be over 18 years of age
- Have mental capacity
- Not be bankrupt, and
- Not be your health care provider or a paid carer
You should also consider appointing more than one person in case the first attorney appointed is unable to act for some reason.
So, get that power of attorney in place so you can save yourself the stress.
This above advice is provided as general advice and should not be interpreted as personal advice. If you would like to discuss the suitability of a power of attorney for yourself or someone you know, or to discuss how to/who to set up a power of attorney, don’t hesitate to contact our friendly staff today for a free initial consultation.