Power of attorney: Just the basics
Should the worst happen, you’ve hopefully got life or income protection insurance to cover you. However, the financial side of things isn’t all you should think about. For example, what about who’s going to make important legal, property or financial decisions on your behalf if you’re somehow incapacitated?
This is where a power of attorney comes in. Appointing someone as power of attorney is an essential part of your estate planning, and will help ensure that your loved ones – and your assets – are properly looked after even when you can’t do so.
Ultimately, whoever is in charge of your power of attorney has a lot of power, no pun intended.
The types of power of attorney
Powers of attorney tend to differ on a state-by-state basis. In Queensland, there are two types: General and enduring powers of attorney.
A general power of attorney applies while you’re still able to make your own decisions. Rather than being in the event of you being incapacitated, it applies when you need someone else to make decisions for you, and only lasts for a set period of time. For example, you might be away on holiday and want to pay a tax bill, or make a property investment.
Those bills can pile up while you’re having the time of your life.
An enduring power of attorney applies if you lose the ability to make your own decisions. You might have fallen into a coma, for instance, or have cognitive health problems – unpleasant stuff to think about to be sure, but important.
Ultimately, whoever is in charge of your power of attorney has a lot of power, no pun intended. They can do everything from make investment decisions to use your personal bank account and pay bank bills. If you so choose, you can even put them in charge of medical decisions.
Choosing the power of attorney
Because of all these powers, it’s important to choose the right person. Your power of attorney should be someone you trust, and who understands your intentions, goals and desires. When they make a decision, it should be the same one you would have made in that situation.
You don’t have to settle for only one though. Perhaps you have a close sibling who knows your personal needs intimately, but isn’t so well-versed in the financial and legal aspects. You could decide to appoint them as an attorney for personal matters only, and appoint your lawyer to make financial decisions, for example. You’d then have to decide if they have to make decisions jointly, or if they can do so separately.
Remember that choosing the power of attorney isn’t the last thing you’ll have to think about. Situations and relationships change, and for that reason you can revoke an enduring power of attorney and appoint a new one. All it takes is filling out a form you can get from Queensland’s Office of the Public Guardian website.