Power of Attorney vs Enduring Power of Attorney

People never want to think about the worst-case scenarios in life, particularly when it comes to something happening to them. However, having that Plan B in place will provide peace of mind in knowing things will be taken care of should the worst occur.

A Power of Attorney is one such document that helps to manage these scenarios. Alarmingly though, a 2024 study of 3000 adult Australians estimated 87% have no such document in place (Australian Human Rights Commission – Empowering Futures (September 2024).

This may be due to people misunderstanding their purpose, a lack of desire to consider their future mental incapacity, or the process being too complex, particularly given that different types of Powers of Attorney exist.

What is the difference between Power of Attorney and Enduring Power of Attorney?

The two forms of Power of Attorney are a General Power of Attorney and an Enduring Power of Attorney. Under both these documents, an Attorney is appointed to a person’s legal and financial affairs.

A General Power of Attorney is restricted, only being valid for a certain period or transaction. Whereas, an Enduring Power of Attorney remains valid when a person loses mental capacity. It offers people a simple and effective way to make arrangements, dealing with their legal and financial matters, should they lose mental capacity.

Duties

The duties imposed under a General Power of Attorney are limited, given the scope is restricted, e.g., limited to a house purchase or whilst overseas. Therefore, those duties are usually not comprehensive and have a defined endpoint.

In contrast, an Enduring Power of Attorney has an almost limitless scope of duties. As a rule of thumb, such a document is not utilised without the consent of the original person whilst they retain mental capacity. But, upon loss of mental capacity, an Attorney may step in to begin to manage your legal and financial affairs. The document essentially provides the Attorney with “the authority to do on behalf of the principal anything that the principal may lawfully authorise an attorney to do” (Powers of Attorney Act 2003 (NSW)).

The key takeaway is, the duties you can impose are discretional and flexible. You can tailor your document to allow your Attorney to do what you’d like, while also ensuring they cannot do things you don’t wish them to do.

How long do they last?

The duration of a General Power of Attorney is always whilst a person has capacity and may be restricted as desired by the document’s wording.

An Enduring Power of Attorney is usually in force from when the appointment is accepted and remains valid past a person losing capacity.

One similarity between these documents is that both cease upon the death of the Appointor (i.e. the person making the document)

Appointment process

The process is much the same whether you make a General or an Enduring Power of Attorney. After consulting with a solicitor, the document will be drafted and includes your wishes and instructions.

Once the solicitor has confirmed you have mental capacity and understand the contents of the document, you will sign the document and, if it’s an Enduring Power of Attorney, then your Attorney(s) may accept their appointment(s).

Importance of an Enduring Power of Attorney and appointing the right person

If an Enduring Power of Attorney is subject to a dispute or has not even been drafted, the New South Wales Civil and Administrative Tribunal (NCAT) is usually the forum for resolving disputes or appointing a financial manager.

If an Enduring Power of Attorney has not been drafted, and the person no longer has legal capacity to make the document, then NCAT can appoint a person (usually a family member) as financial manager, under the supervision of the New South Wales Trustee and Guardian, with directions and authorities as to what decisions the financial manager can make and this is subject to regular review. NCAT could also decide, if there is no such appropriate person, to appointment the New South Wales Trustee and Guardian as financial manager of the person’s legal and financial affairs.

The above senarios can be avoided with the early implementation of an Enduring Power of Attorney, complemented by clear communication with family, so if a person ever loses capacity, the plan is already in place.

This is naturally best-implemented with the advice and assistance of a qualified, experienced solicitor. Our team at Turnbull Hill Lawyers can act upon your instructions, tailor a document which best suits your needs and arrange for execution of a valid Enduring Power of Attorney.

It cannot be understated how important it is have an Enduring Power of Attorney in place well before it is needed. It is never too early.

Please contact our team at Turnbull Hill Lawyers, if you have any questions or would like our assistance in preparing this document.