Do you really understand a durable power of attorney?

If you’re considering a durable power of attorney for an elderly relative, your relative needs to be legally competent to sign the required documents. Legal capacity is one of the biggest problems when signing legal documents, because if your relative is no longer deemed to be competent, they can no longer sign any legal documents, let alone a document that grants an agent power over their assets.

This is one of the common problems faced by many Australians today, because far too often they only realise that they need these powers when it’s too late. Waiting for your doctor to tell you that your relative is no longer competent leaves you with only one option and that is to go through the courts to obtain a conservatorship or guardianship for your relative, which takes time and can be very expensive.

The solution is to have a sensible discussion with your relative while they still have their legal capacity and have these documents signed before they become incompetent.

What is a durable power of attorney?

A general power of attorney grants an agent the power to act on another’s behalf, however this authority terminates on the death or incapacity of your relative. If you need to take care of your relative’s affairs after they are deemed incompetent, then you need a durable power of attorney, but even this does not apply after death.

Where can you obtain the right paperwork?

With the popularity of the internet, many people simply download a generic set of documents, believing that these are what they need. Unfortunately, this isn’t the best approach because invariably, these documents won’t cover your specific situation. Instead they can be very ambiguous, lack the important authorities and may not even cover the legal requirements in your state.

The solution is to have your lawyer draft a customised document that is specific to your relative’s situation and your requirements. As mentioned above, there are two different types of documents and if you don’t have these discussions with your lawyer at the right time, you might find that the power of attorney you have obtained is no longer legal when your relative becomes incompetent. As this was the entire reason for obtaining these documents, you would have to apply to the courts at this point to gain access and manage their assets.

The solution is to discuss your needs with your lawyer and for both your relative and yourself to decide which type of document is required.

What can you do with a power of attorney?

What you can do under a power of attorney will be specifically outlined in the actual document, however you must always act in your relative’s best interests. So whilst you have the power to sell their property for example, it doesn’t give you the right to do so, if it’s not in their best interests.

This overriding obligation to do right for your relative isn’t explicitly stated in the document, but it is implied by law.

Nevertheless, it’s always in a principal’s self-interest to select someone who is trustworthy and who acts with integrity, because whilst an agent cannot legally sell everything and pocket the money, if they are of good character, it is unlikely that this situation would occur.