There may be times in our lives when we are unable to conduct our own affairs and may need someone else to make important financial, health, and other decisions on our behalf. This may be as a result of physical or mental illness, or being out of the country for an extended period.
A power of attorney is a legally binding document that allows you to transfer specific power and rights to a trusted person to enable them to look after your affairs. In legal terms, you are referred to as ‘the principal’ and the person you nominate as your representative is referred to as your ‘agent.’
Regardless of what type of power of attorney you use, it is important to think carefully about who will be your agent. This person will have a lot of control over your finances so it’s crucial you trust them completely.
There are three main types of powers of attorney: a General Power of Attorney, an Enduring Power of Attorney (financial and/or personal) and an Enduring Power of Attorney (medical).
A general power of attorney
This document is comprehensive and gives your agent all the powers and rights you would have yourself. For example, a general power of attorney may give your agent the power to sign documents for you, pay your bills, and conduct financial transactions on your behalf. A general power of attorney ends on your death or when you become incapable of making decisions unless you cancel it before then.
Enduring power of attorney (financial and/or personal)
An enduring power of attorney for financial or personal issues allows your agent to continue making decisions on your behalf, even after your mental ability fails. Older people often organise to have this type of power in case they develop dementia or some other condition in the future, rendering them incapable of managing their own affairs. If you do make the decision to sign over this power to your agent, it’s important you fully understand what is involved and the implications.
Enduring power of attorney (medical)
This is where you appoint your agent to make medical treatment decisions for you, such as agreeing to medication or surgery. Enduring means it continues (endures) when you get to the point when you are unable to make these types of decisions for yourself.
How do I create a legally binding power of attorney?
Once you make the decision to give power of attorney to someone else, you will need to have the appropriate legal forms drawn up and witnessed. There are many templates available online that you can download and simply fill in the relevant details. However, if your circumstances and needs are relatively complex, it may be worth speaking to your lawyer and asking them to draft a document specifically for you.
Can I revoke Power Of Attorney? How?
You are within your rights to revoke your agent’s powers at any time, for any reason, provided you have the capacity to do so. A Revocation of Power of Attorney is a legal document used to cancel an existing power. Templates are readily available online or you can ask your lawyer to draw one up. You will need to sign this document in the presence of two adult witnesses and in the case of an enduring power of attorney (medical), one of the witnesses must be a doctor. Once your agent receives this document from you their powers effectively cease.