A Power of Attorney (POA) is a document which allows you (the principal) to appoint someone else (the Attorney) to make financial and geal decision on your behalf.
A POA can operate in different ways, allowing the document to be triggered by different events, these include:
- A POA for a specific purpose or need – for example you can appoint and Attorney to do a specific task, like sell your house, whilst you are on an extended holiday overseas.
This POA can be specific, for example, I appoint Henry to sell my property at 1 Madeup Street, Fakesville, for not less than $2,500,000.00 for the period from 1 January 2026 and 30 March 2026. - A POA can be general, for example, I appoint Alexa to act as my Attorney from the date I sign the document, including when I no longer have capacity.
This would give Alexa that ability to sign documents on your behalf and deal with your assets from the time she signed the Power of Attorney and therefore, “accepted the appointment” - A POA can be made to come into effect on the loss of capacity. This is also called an Enduring Power of Attorney and is used to give a person the ability to assist you in the event you no longer have legal capacity.
The Attorney is required to act within your best interest, exercising what is legally referred to as their “fiduciary duty”. In the event an attorney does not act in accordance with their fiduciary duty
What is legal capacity
Legal capacity is the ability of a person to understand information provided to them, make decisions, and communicate their choices so as to show that they understand the implications of their decision.
Except in limited circumstances, a person under the age of 18 years does not have legal capacity and a person can lose legal capacity for example due to illness, injury or disability affecting their brain. Simply put, a person does not have legal capacity if:
- They are unable to understand the nature and consequences of their decisions.
- They are unable to weigh up the options before them in a meaningful way
- They are unable to communicate their decision clearly, and consistently.
In these circumstances a person may need to be appointed to make legal decisions for the principal.
The Legal Requirements in NSW
A Power of Attorney in NSW is valid where:
- The principal is over the age of 18 yeas and there are no questions as to their legal capacity.
- The principal has to sign the document before a prescribed witness. A prescribed witness includes (among others): a solicitor or barrister, a Registrar of a Local Court, a licensed conveyancer who has done required training, or certain employees of NSW Trustee & Guardian. The witness must certify that the principal understands the effect of the document.
- The attorney must accept the appointment, in writing.
There is no centralised registrar for your POA, however if your attorney wants to use it to deal with real estate, they will have to register the POA with the NSW Land Registry Service.
What Powers does an Attorney have?
- An Attorney appointed under Power of Attorney has all the powers to deal with your assets as you, including the ability to buy and sell shares, houses and other assets, as well as to access bank accounts.
- An Attorney cannot make decisions about personal, medical or lifestyle decisions.
You can also limit the powers that an Attorney has so as to ensure that they do not do something you don’t want them to, for example, you can prevent them from selling or disposing of specific assets, like your home.
Can I revoke or change my Power of Attorney?
You can revoke or change a POA (so long as you have legal capacity), however there are requirements for you to notify the attorneys, in writing, that the old POA has been revoked or changed.
What happens if I don’t have an Enduring POA and I lose capacity?
If you lose capacity and do not have an Enduring POA your loved ones will need to make an application to the NSW Civil and Administrative Tribunal for a Financial Management Order.
People appointed under a Financial Management Order are under the ultimate control of the NSW Trustee & Guardian who will ultimately manage your assets and will also charge an administration fee based on the value of your assets.
