Power of Attorney: What It Is, Why You Need One, and How to Get It Right
Planning for a time when you might not be able to make your own decisions isn't something most people want to think about. But having the right documents in place now means the people you trust can step in and act on your behalf if that time ever comes.
A Power of Attorney is one of the most important legal documents you can have and one of the most misunderstood.
What Is a Power of Attorney?
A Power of Attorney is a legal document that allows you to appoint someone you trust to make decisions on your behalf. The person you appoint is called your "attorney" - not in the legal profession sense, but simply the person authorised to act for you.
In Victoria, there are several types of Power of Attorney, and each one serves a different purpose.
The Different Types
General (Non-Enduring) Power of Attorney
This allows your attorney to manage your financial and legal affairs, but only while you have capacity to make your own decisions. It's often used for practical situations - for example, if you're travelling overseas and need someone to handle a property settlement on your behalf.
If you lose mental capacity, a general Power of Attorney automatically ends.
Enduring Power of Attorney (Financial)
This is the one most people need. An enduring Power of Attorney for financial matters continues to operate even if you lose the ability to make decisions for yourself. Your attorney can manage your bank accounts, pay bills, deal with property, and handle other financial matters.
You can choose whether it takes effect immediately or only when you lose capacity.
Enduring Power of Attorney (Medical Treatment)
This appoints someone to make medical treatment decisions on your behalf if you become unable to make them yourself. This includes decisions about surgery, medication, and other treatment options.
Your medical attorney should be someone who understands your values and wishes regarding healthcare.
Supportive Attorney
A newer option in Victoria, a supportive attorney helps you make and give effect to your own decisions rather than making decisions for you. This can be appropriate if you need assistance but still want to maintain control over your own affairs.
Why You Need One
Many people assume their spouse or adult children will automatically be able to manage their affairs if something happens. This isn't the case.
Without a valid Power of Attorney, your family may need to apply to VCAT (Victorian Civil and Administrative Tribunal) to be appointed as your guardian or administrator. This process can be time-consuming, stressful, and expensive - all during a period when your family is already dealing with a difficult situation.
Common scenarios where a Power of Attorney becomes essential:
- A stroke, accident, or illness leaves you unable to communicate or make decisions
- Dementia or cognitive decline develops gradually over time
- You're having a planned surgery and want someone authorised to act just in case
- You're ageing and want to ensure a smooth transition if your health declines
Choosing the Right Attorney
This is one of the most important decisions you'll make. Your attorney should be someone who:
- You trust completely with your finances and personal affairs
- Understands your values and wishes
- Is willing and able to take on the responsibility
- Is organised and capable of managing financial matters
- Will act in your best interests, even under pressure from others
You can appoint more than one attorney and specify whether they must act jointly (together) or severally (independently). You can also appoint different attorneys for financial and medical decisions.
Common Mistakes to Avoid
Waiting too long
You can only make a Power of Attorney while you have mental capacity. If you wait until a diagnosis of dementia or after a serious health event, it may be too late.
Using DIY kits without advice
While it's possible to create a Power of Attorney without a solicitor, mistakes in execution or wording can render the document invalid. The cost of getting it done properly is minimal compared to the cost of getting it wrong.
Not having the conversation
Your attorney needs to know they've been appointed and understand your wishes. A Power of Attorney sitting in a drawer that nobody knows about won't help anyone when it's needed.
Forgetting to update it
Like a will, your Power of Attorney should be reviewed when your circumstances change - particularly if your relationship with your appointed attorney changes, or if they become unable to act.
When Should You Set One Up?
The short answer is now. It doesn't matter whether you're 30 or 80 - accidents and illness don't discriminate by age. Having these documents in place is simply part of responsible planning.
If you already have a Power of Attorney, consider when it was last reviewed. Does it still reflect your wishes? Is your appointed attorney still the right person for the role?
Take the Step Today
Setting up a Power of Attorney is straightforward and gives you peace of mind that the people you trust can look after your affairs if you're ever unable to do so yourself.
Want to put a Power of Attorney in place? Our wills and estates team can walk you through your options and make sure everything is set up correctly. Call us on (03) 9787 4511 or book a consultation.
