When people come to plan out their affairs for the later stages of their life, they are generally encouraged to nominate an enduring power of attorney.
This is a legal document used to appoint a person to make important decisions about their property and/or financial affairs should they lose capacity to do so on their own. By doing so, you can have some control over how your financial affairs are conducted once you lose personal capacity, rather than a public guardian or the courts where no enduring power of attorney exists.
The attorney you appoint can manage your bank accounts, pay bills and other debts, and sell or buy property and assets on your behalf.
Who should you appoint as an attorney?
An attorney should be a responsible person you trust, and preferably someone with an understanding of, and experience in, managing sometimes complex financial matters. They may be a family member, a close family friend, or a trusted professional such as an accountant, financial adviser or lawyer.
Importantly, you can also appoint more than one person with enduring power of attorney. When doing so, these attorneys can act:
- Jointly and severally: the attorneys can make decisions together or separately;
- severally: they can make decisions independently of the other attorneys;
- jointly: the attorneys must agree on all decisions.
It’s important to seek the benefit of legal expertise when appointing more than one attorney. The people chosen need to be able to cooperate with each other and have the interests of the principal – the person who appointed them – uppermost in their mind when fulfilling the role.
Why appoint more than one attorney?
There are numerous reasons a person may appoint more than one person with power of attorney. Perhaps one or more of the people you appoint travels a lot, or perhaps you just want a ‘checks and balances’ approach that joint or several attorneys can bring to their roles in managing your affairs.
Joint attorneys, it must be remembered, need to both agree in order to act, including doing such things as attending a bank together if signatures are needed or to withdraw funds from the principal’s account. This setup can act as a safeguard that both will act without self-interest when it comes to managing your affairs. Conversely, jointly appointed attorneys can sometimes lead to conflict and inconvenience, particularly where, for example, two siblings who do not get along hold the roles and cannot agree on the details of managing your financial affairs, or are not always available to make joint decisions.
Attorneys appointed jointly and severally can make decisions independent of each other, which can lead to mistrust and conflict if there is disagreement on how each of them has acted. Suspicion by one attorney of financial abuse by another could – in a worst case scenario – lead to litigation in order to stop one of the parties acting any further.
There is also the issue of appointing a person who is older or of similar age to you, who may either die or lose capacity before you do. In the case where one of your attorneys dies or cannot continue in their role, what happens next depends on how the attorneys were appointed. Where attorneys were appointed jointly and one of them is either unwilling or unable to carry out the role, the enduring power of attorney will automatically cease. One of the advantages of appointing attorneys jointly and severally, or severally, is that the power continues despite one of them being unable to act. The other attorneys continue to make decisions under the power on your behalf.
When does an enduring power of attorney end?
People of any age can make an enduring power of attorney so long as they have the mental capacity to understand the nature and effect of the power when they sign the document.
An enduring power of attorney ends:
- By revoking it (so long as you have mental capacity at that time);
- at the time of your death;
- when only one person was appointed as your attorney and dies or is unable to continue;
- when you have appointed two or more attorneys to act jointly and one of them dies or can no longer act as your attorney.
Enduring power of attorney may also end due to bankruptcy and other legal reasons. In these cases legal advice should be sought.
If your enduring power of attorney has ended and you no longer have the mental capacity to make a new one, the Guardianship Tribunal may be able to make orders so the enduring power of attorney can continue. For example, if your enduring power of attorney has ended because a jointly appointed attorney has died, the Tribunal has the power to reinstate the enduring power of attorney so that it can continue in your best interests.
The importance of legal advice
Appointing an enduring power of attorney is an important decision to be made as part of the estate planning process. As we’ve outlined here, there are pros and cons to empowering more than one person to be an attorney who can manage your financial affairs.
Consulting experienced estate planning lawyers with years of experience in this area of the law is a wise course of action. At OMB Solicitors we can expertly advise you on the benefits and the potential pitfalls when it comes to enduring power of attorney, particularly the issue of appointing more than one attorney. Contact us today on (07) 5555 0000.