Navigating Powers of Attorney and Enduring Guardianship: Understanding their Role in Financial and Health Decisions

Introduction

A Power of Attorney (POA) and Enduring Guardianship are vital legal documents that allow an individual to designate someone to make decisions on his/her behalf. While people might be familiar with its role in financial matters, there’s often confusion surrounding whether a POA also grants authority over medical/health decisions. In this article, we’ll explore the scope of a Power of Attorney, as well as its counterpart, the Enduring Guardianship Appointment.

Understanding the Power of Attorney

A Power of Attorney is a legal instrument that allows an individual (the principal) to appoint an attorney to act on his/her behalf. These legal instruments empower individuals to appoint a trusted person to manage financial and legal decisions on his/her behalf should they be unable to do so themselves. This can be due to an injury or illness.

There are two types of Power of Attorney documents: the General Power of Attorney, and an Enduring Power of Attorney.

Power of Attorney (General and Enduring) 

While the General Power of Attorney and Enduring Power of Attorney have many similarities, their key difference lies in their area of decision-making ability and the circumstances under which they remain valid.

A General Power of Attorney is a legal document that allows an individual (the principal) to appoint an attorney to make financial and legal decisions on his/her behalf. However, it is only effective while the principal has the mental capacity to make his/her own decisions. If the principal becomes mentally incapacitated or loses the ability to make decisions, the General Power of Attorney becomes invalid, and the power of the person appointed to act on behalf of the principal ceases.

This means that a General Power of Attorney is suitable for situations where the principal needs temporary assistance or support in managing his/her financial and legal affairs but anticipates that the person should be able to make decisions on his/her own in the future.

An Enduring Power of Attorney is similar to the General Power of Attorney in that it allows the appointment of an attorney to manage financial and legal matters on behalf of the principal. However, the key distinction of the Enduring Power of Attorney is that it continues to be effective even if the principal becomes mentally incapacitated or unable to make his/her own decisions. The enduring nature of this document means that the appointed attorney’s authority endures beyond the incapacity of the person granting the Power, allowing ongoing management of his/her affairs by the person to whom the power is granted.

The Enduring Power of Attorney is particularly valuable in planning for future scenarios where the principal may experience declining mental health, advanced age, or other circumstances that could impair his/her decision-making abilities.

Enduring Guardianship

An enduring guardianship is a legal arrangement that allows someone to appoint another person (the enduring guardian) to make decisions about their health care, living arrangements, and other personal matters if they become unable to make these decisions for themselves due to illness, injury, or disability. This arrangement is usually made through a legal document called an Enduring Guardianship appointment, which outlines the powers and responsibilities of the enduring guardian. The enduring guardianship appointment only comes into effect if the person who made it loses the capacity to make these decisions themselves.

Scope and Options

When appointing a Power of Attorney, a person has a number of choices, including a family member, close friend, solicitor, or a trustee organisation. Once appointed, the appointed Attorney can carry out a number of tasks for the principal including signing legally binding documents, operating bank accounts, paying bills, buying and selling real estate, managing investments, collecting rent, and the Power can be activated when an individual is unable to undertake the tasks themselves, for example, following a medical incident or a move overseas. 

When appointing an Enduring Guardian, a person has a number of choices, including a family member and/or close friend. Once appointed the Guardian can carry out a number of tasks for the principal including medical and lifestyle decisions. 

Similarly to an Enduring Guardian , an Enduring Power of Attorney comes into play when an individual is no longer able to make decisions for themselves, and remains in place until:

  • you revoke or cancel it while you have mental capacity to do so
  • your Enduring Attorney/Guardian resigns from the role, dies or is unable to carry out the role
  • the appointment is changed or revoked by the Guardianship Division of NSW Civil and Administrative Tribunal (NCAT) or the NSW Supreme Court.

SOURCE: https://www.tag.nsw.gov.au/wills/appoint-enduring-guardian/what-enduring-guardian 

While the decision-making scope of the two documents is different, they go hand in hand to help ensure that your health, finances and lifestyle are appropriately managed by those around you in the event that you are no longer able to do so.

Creating a Comprehensive Estate Plan

While both Power of Attorney and Enduring Guardianship Appointment are a crucial part of an estate plan, it’s essential to consider other legal documents to ensure comprehensive protection. This may include a Living Will (Advance Healthcare Directive) to outline specific medical preferences and also a Last Will and Testament to address the distribution of assets after the principal’s passing. An estate plan should be regularly reviewed and updated to reflect changes in circumstances or preferences. 

If you’re looking to appoint a Power of Attorney or Enduring Guardian, or update your Will & estate plan, the experienced team at Maguire and McInerney are here to help. Drop by our office or call today to book an appointment.

Conclusion

A Power of Attorney is a powerful legal tool that allows individuals to appoint trusted attorneys to act on his/her behalf with respect to their financial and legal affairs. An Enduring Guardianship Appointment ensures that a chosen representative has the authority to make vital lifestyle and healthcare choices when the individual is unable to do so. By creating a comprehensive estate plan, individuals can safeguard their interests, protect their healthcare wishes, and provide peace of mind for themselves and their loved ones. 

The team at Maguire & McInerney are here to assist in crafting a customised Power of Attorney, and Enduring Guardianship Appointment and Estate Plans to secure your future and ensure your medical and financial decisions are in trustworthy hands. Contact us today to book an appointment.