In Victoria, legislation has created several different types of powers of attorney that enable a person to confer power on other people to make decisions regarding their financial, medical and lifestyle affairs.
The Instruments Act 1958 (as amended) (Act) deals with powers of attorney, the 2 main types being:
- General Power of Attorney
- Enduring Power of Attorney
General Power of Attorney
This type of power of attorney enables a person (donor) to appoint a person or more than one person (attorney) to handle his/her affairs. This type of power of attorney was often put in place when the donor wanted to travel or was being transferred overseas and needed someone to pay bills, etc.
The biggest problem with the General Power of Attorney is that it ceases to have any effect if the donor loses capacity, eg, through a brain injury or dementia.
Enduring Power of Attorney (Financial)
Because of the serious limitation of a General Power of Attorney, the Act was amended to recognise enduring powers of attorney.
As the name suggests, this type of power of attorney will continue to have force and effect notwithstanding the donor subsequently losing capacity. This difference is why very few people use General Powers of Attorney.
The document creating the Financial Enduring Power of Attorney enables the donor to dictate:
- the number of attorneys to be appointed
- how many attorneys are to be appointed, eg
- a sole attorney
- a sole attorney with an alternate or “back-up attorney”
- two or more attorneys who are appointed jointly (joint appointment means that all the attorneys must act in the decision-making process, the signing of documentation (including cheques), etc
- two or more attorneys who are appointed jointly and severally (joint and several appointment means that all or any or a combination of attorneys can legally and validly act in the decision-making process, the signing of documentation (including cheques), etc
- when the appointment is to take effect (eg, immediately, or only as and from a specified date, or until some event occurs)
- the scope of the attorney’s powers, eg, unrestricted (this means that the attorney, effectively steps into the donor’s shoes and can make decisions about all matters relating to the donor’s finances), or limited (eg, signing cheques only, or paying certain bills, or doing all things associated with the purchase or sale of a property).
A Financial Enduring Power of Attorney does not empower the Attorney to make decisions regarding the Donor’s medical treatment.
There are specific rules that must be followed to create an effective and operational Enduring Power of Attorney – including one of the witnesses being a person who is authorised to witness statutory declarations. The failure to follow the correct procedure can result in the document having no effect.
Because revocation or death are the only ways in which an unconditional (in terms of time and purpose) Enduring Power of Attorney ceases to have effect, the person(s) named as attorneys must sign a Statement of Acceptance of the appointment.
Although the Enduring Power of Attorney form can be downloaded from various websites, because it is an extremely important document, professional advice regarding its effect and operation should be obtained and a professionally drawn document should be prepared.
Enduring Power of Attorney (Medical)
As the name suggests, this document enables the donor to appoint a person to make decisions regarding medical treatment to be given or withheld to the donor. The Medical Treatment Act (1988) governs this type of power of attorney.