Witnessing a Power of Attorney

A power of attorney is one of the most important documents that you can put in place. Although it is a relatively simple document, it has significant and wide-ranging powers. A power of attorney allows a nominated person to take control over important decisions about your finances and legal affairs; to put it simply, they ‘step into your shoes’.

Naturally, though, you must have capacity to execute the document and do so in front of a prescribed witness. There are unfortunately many examples where these documents are retrospectively found to be invalid due to the signing and witnessing being done incorrectly. This can lead to a difficult situation where a person does not have a valid power of attorney in place and therefore their loved ones must seek orders from the NSW Civil and Administrative Tribunal.

With NCAT applications on the rise each year, it is a stark reminder of the need to proactively get your affairs in order, and to do so validly.

What is a power of attorney?

A power of attorney is a document that appoints another person(s) to make legal and financial decisions for the person who made the document.

There are typically two types of power of attorney; general and enduring. This article will focus upon enduring powers of attorney, as they are the most common type. An enduring power of attorney will continue to operate past the point that the Principal becomes unable to make decisions for themselves.

In New South Wales, the most common wording of the document will see an attorney only being able to act in two circumstances: when the principal instructs the attorney to do something, or when the principal has lost capacity to make their own decisions.

An attorney, subject to any limitations or conditions placed in the document by the principal, can do anything legally or financially that the principal can do; for example, buy and sell property, pay bills, invest funds and transact on bank accounts.

Importantly, an Attorney must always act in the principal’s best interests. These documents are subject to the Powers of Attorney Act 2003 (NSW), which also imposes significant penalties should an attorney misuse their position.

How do I appoint a power of attorney in NSW?

It is important here to clarify that a power of attorney requires two different type of signatures. Firstly, there is the signature of the appointor to execute the document. This signature does require a witness. Secondly, there is the signature of the attorney(s) to accept their appointment(s). These signatures do not require a witness.

The Powers of Attorney Act 2003 (NSW) requires an enduring power of attorney to be “witnessed by a person who is a prescribed witness (not being an attorney under the power)”. Furthermore, there must be a certificate annexed to the document by the prescribed witness that confirms:

1. the person explained the effect of the instrument to the principal before it was signed, and
2. the principal appeared to understand the effect of the power of attorney, and
3. the person is a prescribed witness, and
4. the person is not an attorney under the power of attorney, and
5. the person witnessed the signing of the power of attorney by the principal.

The legislation goes on to outline who a prescribed witness is:

• A registrar of the local court;
• An Australian legal practitioner;
• A licensee under the Conveyancers Licensing Act 2003 (NSW);
• An employee of the NSW Trustee and Guardian or a certain trustee company; or
• A duly qualified overseas legal practitioner.

Once a power of attorney document has been validly executed and witnessed by the appointor, it is thereafter in force. The attorney(s) will need to sign to accept their appointment(s), however, before the document can be used.

Can a JP witness a power of attorney?

No, a justice of the peace cannot witness a power of attorney.

The categories of persons outlined under section 19(2) of the Powers of Attorney Act 2003 (NSW) do not include justices of the peace and, as such, they are unable to validly witness a power of attorney.

What happens if my power of attorney is not witnessed?

If a power of attorney is not witnessed, or witnessed invalidly or in a manner contrary to the Powers of Attorney Act 2003 (NSW), the document itself will not be valid.

The appointor therefore does not have any document that legally confers decision-making authority upon another person. If the appointor still has capacity, a new document can simply be put in place.

However, if the appointor no longer has capacity, significant issues arise. Persons close to them, perhaps the intended attorney themselves, will then need to make an application to NCAT for orders such as financial management orders. This can be a very stressful, exhausting, and slow process, which is compounded by the fact that important decisions may need to be made quickly.

Contact Turnbull Hill Lawyers

It is an unfortunate reality that many people will lose the capacity to make their own decisions and then require an attorney to step in for them. The worst-case scenario is one in which proactive estate planning has been done, but which ultimately fails due to a document being invalid as a result of the witnessing.

Expert legal advice can help to ensure that this doesn’t occur and your well-laid plans remain effective.

If you need help with witnessing a power of attorney in NSW, or wish to put a valid power of attorney in place, make an appointment with one of the experts in the Wills and Estates team at Turnbull Hill Lawyers.