There are different types of Powers of Attorney you can nominate, but the two main ones are a Medical Power of Attorney (also known as a guardianship) and an Enduring Power of Attorney. A Medical Power of Attorney gives another person authority to make decisions about your medical treatment if you’re not physically or mentally able to choose for yourself. An Enduring Power of Attorney (PoA), gives someone the legal authority to manage your financial affairs when you’re unable to do so.
Why would I need a Power of Attorney?
Having a PoA organised is important in case you lose capacity make decisions about your finances through medical reasons, such as age, injury or illness. It can also be worthwhile to organise a PoA if you plan on living or travelling overseas for an extended period of time.Your chosen attorney should be someone you can trust to act in your best interests. And it certainly helps if they have some experience with finances and good knowledge of your assets so they can fully understand the consequences and results of any decisions or actions they take. In many cases, attorneys are family members, however where family members don’t have the experience to be your attorney, or where relationships have broken down and there is a lack of trust around money, a close friend could be asked to step in. Whoever you choose, it’s important they accept their role and understand what’s involved. And if you have a financial planner advising you on your affairs, having them meet with your attorney can prepare the way for an easier transition, if the time comes when they need to take up that role.
For a more comprehensive article around PoA, and a short video, please click here for an excellent article from Money and Life.