Introduction to the Enduring Power of Attorney in Australia

Recently, we wrote an in-depth article focusing on the Australian POA (Power of Attorney) authorization. In Australia's mature and rigorous legal system, a POA functions like a finely tuned legal gear, where a small movement can trigger a larger effect, intricately linking to numerous rights protection and decision-making processes. In that article, we primarily introduced two core types: Enduring Power of Attorney (EPOA) and General Power of Attorney (GPOA). Once the article was published, our backend was instantly flooded with enthusiastic responses, and among the many comments, the most frequent request was for a deeper understanding of the Enduring Power of Attorney. Given the strong demand, today we will fully explore and uncover its mysteries.

1. What is an Enduring Power of Attorney?

An Enduring Power of Attorney is a legal document that allows you to designate someone, known as the attorney, to make decisions about your personal affairs (such as your residence) or financial matters (such as paying bills), or both. The remarkable feature of this document is that it remains valid or continues to be effective even if you become unable to make decisions.

You have the flexibility to limit the powers granted to specific matters and choose when the authority will take effect. It's important to note that your lawyer cannot make medical treatment decisions for you unless they are also appointed as your medical decision-maker.

If you are 18 years old or older and have decision-making capacity, you can create an Enduring Power of Attorney. And remember, you can only create an Enduring Power of Attorney for yourself; you cannot create one on behalf of someone else.

To put it vividly, it’s like casting a steady anchor for the ship of your life in the midst of stormy seas. Even if the captain (the grantor) temporarily loses consciousness, the ship (personal matters) will not drift out of control. It protects not only assets but also dignity and quality of life, ensuring that in the face of unforeseen future challenges, someone you trust can maintain affairs according to your wishes.

2. Scenarios for Using an Enduring Power of Attorney

1. Loss of Decision-Making Capacity in the Future

EPOA is typically signed when the grantor is fully mentally and physically capable. However, it truly proves its worth when the grantor loses decision-making capacity in the future due to illness or mental health issues. For instance, a grantor may gradually lose their judgment capacity because of chronic conditions like Alzheimer's. In such a situation, the pre-signed EPOA kicks in, allowing the appointed attorney to step in and handle various affairs.

2. Physical or Mental Health Issues

When the grantor is unable to make decisions regarding financial or personal matters due to illness, accident, or dementia, having an EPOA in place is crucial. By appointing an agent in advance, they can ensure that there is someone able to make decisions on their behalf when they no longer can.

3. Handling Financial Affairs

There are times when the grantor is temporarily unable to handle financial matters, for example, during business travel or hospitalization. In these cases, the agent can manage their finances, assets, and accounts, etc., safeguarding that daily life and financial management are not disrupted.

4. Medical and Life Decisions

Besides financial matters, an EPOA can authorize the agent to make medical and life-related decisions when the grantor cannot express their own wishes. This often demands special instructions, such as when the grantor’s wishes about treatment methods or surgical consent are unclear.

5. Accidents and Emergencies

If the grantor encounters an emergency or sudden accident and is unable to make immediate critical decisions, the EPOA enables the agent to act swiftly and handle relevant matters without delay.

3. Key Steps in Creating an Enduring Power of Attorney

1. Accurately Identify Both Parties

At the very start of the document, it is imperative to carefully specify the identities of both the grantor and the agent. Make sure the names are spelled correctly, the contact information is current, and the address is accurate down to the house number. A minor typo in the grantor’s name can trigger problems during notarization and verification, potentially delaying the document's effectiveness or even rendering it completely invalid.

2. Clearly Define the Scope of Authority

This is the heart of the document. You need to meticulously list in detail what authority is being granted. Whether it only pertains to financial matters like bank account management and stock trading, or extends to life decisions such as medical treatments and elder care, absolute clarity is key. For instance, if your intention is to let the agent manage investments but not withdraw large sums of money, failing to spell this out could lead to disputes further down the line.

3. Follow Legal Format Standards

Different Australian states have slightly varying legal requirements, so the formatting standards must be strictly adhered to. This includes aspects like paper size, font, line spacing, clause layout, and page numbering. Some states require the document to be printed on A4 paper, with double line spacing, and specific legal declarations at the bottom of the pages. Any deviation from these norms could make the document invalid.

4. Common Issues in Creating an Enduring Power of Attorney

1. Difficulties in Choosing the Agent

Many people struggle when it comes to choosing an agent. If you opt for a close family member, say a child, they might lack the necessary experience in financial matters, especially when it comes to complex tax planning. On the other hand, a trusted friend, while reliable in normal circumstances, might face conflicts of interest when large amounts of wealth are on the line. For example, a Chinese entrepreneur appointed a long-time friend as their agent. But when the company faced a merger and restructuring, the friend put self-interest first and almost handed over the company, putting the family wealth at great risk.

2. Legal Terminology Confusion

Enduring Powers of Attorney are filled with specialized legal terms. Ordinary individuals may inadvertently use imprecise wording, which can have far-reaching legal consequences. Take "managing assets" and "disposing of assets" as an example. They may seem similar at first glance, but legally, they are worlds apart. A poorly worded document could create ambiguous situations and spark legal disputes when it comes time to execute it.

3. Notarization Confusion

The notarization process often bewilders people. They may be unsure about which identification or proof of assets to bring, or whether they should go to a law office, a notary public, or a specific government agency to have the document legally validated. Some make the mistake of thinking that simply signing the document is enough, only to find out that the document is not recognized when they actually need it, thus missing out on opportunities to handle important matters.

4. Do I Need a Lawyer?

The answer is yes if you prefer, but it’s not obligatory. Hiring a lawyer can help you avoid difficulties in selecting an agent. Choosing the right person is of utmost importance because they will be entrusted with making vital decisions on your behalf during vulnerable times. You need someone you trust to act in your best interest when you are incapacitated. The agent should not be someone likely to predecease you and should be willing, capable, and available when decisions need to be made. Of course, you can appoint multiple agents.

If you appoint two or more lawyers, you should specify how decisions will be made:

• Jointly: They must make decisions together and sign any documents together.

• Joint and Several: They can make decisions together or independently.

• Individually: Each agent can make decisions independently.

• Majority: A majority of agents must agree before a decision is made.

Make sure the arrangements you make are both feasible and clear.

5. Which Form Should I Use?

This PDF allows you to appoint one lawyer and up to two substitute lawyers. You will also need to specify what decisions your lawyer can make. If you want to appoint more lawyers or substitute lawyers, or if you require someone else to sign on your behalf due to a disability, you need to use a longer form.

Of course, the above cannot cover all the issues involved in the EPOA process. As the saying goes, "A thousand readers, a thousand Hamlets," and everyone may encounter different situations. If you have any specific concerns, please feel free to contact us.