A power of attorney is a document that gives a person (called either the donee, attorney or appointee) the power to act on behalf of the person or company who gives the power (called the donor, principal or appointor). The major Act that regulates general and enduring powers of attorney in South Australia is the Powers of Attorney and Agency Act 1984 (SA).
|Appointing a person as an attorney is giving them the authority to deal with the donor's financial affairs. It does not give the attorney the authority to deal with other personal areas of the donor's life, such as health care, residential and accommodation arrangements, and lifestyle matters.|
A power of attorney is different from an advance care directive, which enables someone to say what they want to happen in relation to certain personal areas of their life such as those relating to medical and lifestyle matters, or to appoint another person to make decisions for them regarding certain personal matters. An advance care directive can relate to their health care, residential and accommodation arrangements, and to their personal affairs. See Advance Care Directives.
In South Australia any person who is over 18 years and who has 'legal capacity' (see Loss of Legal Capacity) can make a power of attorney. The issue of whether someone under 18 years can make a power of attorney is the subject of some legal debate. If a person is under 18 and considering making a power of attorney, they should seek advice from a lawyer.
There are two different forms of powers of attorney - they have similarities but there are some important differences.
A general power of attorney and an enduring power of attorney both give an attorney authority to deal with a person's financial affairs. However, while a general power of attorney is cancelled automatically if a person becomes legally incapacitated, an enduring power of attorney will still be effective.
Giving either power of attorney does not mean that a person loses control over their affairs. A person can still deal with whatever matters he or she chooses, while the donee can only do the things that the form allows. However, giving a power of attorney to someone who is not absolutely trustworthy is very dangerous.
A power of attorney document provides proof of the donee's power to act on the donor's behalf. It must be shown whenever the donee is doing something in place of the donor.
It is not always necessary to make a power of attorney to deal solely with a social security pension, and other arrangements can generally be made to use a bank account on a person's behalf without going to the trouble, and risk, of making a power of attorney. However, it is unlawful to deal with someone else's money, no matter how close the two parties are, without that person's authority.
A donor acting as a trustee or personal representative for another person cannot use a power of attorney to pass on these functions to someone else [Powers of Attorney and Agency Act 1984 (SA) s 5(4)].
A power of attorney ends when the donor dies. At this point, a Will takes over [see Wills].
An enduring power of attorney continues to operate if a donor becomes legally incapacitated. A general power of attorney will cease automatically in this situation.
Sometimes it is difficult to assess whether or not someone is legally incapacitated. Legally incapacitated means that someone is unable to understand the nature of the document and its effect, or is unable to communicate in any way. If there is a question about a person's competence it is best to obtain a written medical opinion, and it is best to get that from the person's own doctor.
Being physically incapacitated, for example being paralysed and being unable to sign documents, does not mean that person is necessarily legally incapacitated. The person may still be able to understand the document and its implications. To have legal capacity, the person needs to be able to communicate in some way. This can be a complex area of law. Legal advice should be sought if there is any question as to a person's legal capacity.
It is not possible to make an enduring power of attorney after a donor has already become legally incapacitated. The affairs of a person who no longer has legal capacity and has not made an enduring power of attorney may still be handled on an informal basis in some cases - for example, if the person's money is in a joint bank account with only one person needing to sign. If complicated matters or family disputes arise, anyone with a proper interest in the care of the person can make an application to the South Australian Civil and Administrative Tribunal (SACAT) to appoint an administrator to manage the person's financial affairs. The Tribunal can appoint an administrator for a person it considers to be incapable of being in control of his or her own affairs, see Guardianship and Administration.
Alternatively, the Legal Services Commission and the Office of the Public Advocate have produced a do-it-yourself Enduring Power of Attorney Kitwhich provides all the necessary forms, answers common questions regarding enduring powers of attorney and shows how to fill out the forms. The Kit is available to purchase from any Legal Services Commission SA office.
However the preparation and use of the forms can be complex and it is wise to seek legal advice before using them.
A Power of Attorney which authorises any dealing in land owned by the donor (including selling land or registering leases) must be deposited with the Lands Titles Office [Real Property Act 1886 (SA) s 155]. The Lands Titles Office can give advice on how this should be done. There is a fee payable to the Lands Titles Office when the Power of Attorney is lodged.
If it is not necessary to deal with land now but it might be in the future, the form can still be deposited immediately so as to ensure that it has been completed properly. This avoids the risk that the form will have to be corrected later. This is a problem if it is an enduring power of attorney and the donor is legally incapacitated when the correction needs to be done. In this case, the form could not be corrected, as it is the donor who has to authorise this. Alternatively, the form may be kept in a safe place and deposited when the necessity arises.
After carefully checking the power of attorney to make sure that it accurately reflects his or her intentions, the donor should sign it before a person authorised by law to take affidavits. This means a lawyer, a justice of the peace, or a proclaimed police officer.
The donee of an enduring power of attorney must sign the form to show that she or he agrees to accept the responsibility of being a donee. The wording used for the acceptance must comply with the wording in Schedule 2 of the Powers of Attorney and Agency Act 1984 (SA). This is the wording on the official 'Enduring Power of Attorney' form. Although it is not a requirement that the donor and donee sign at the same time, it is advisable for the donee to sign within a reasonable time after the donor's signature has been witnessed, as this will avoid complications later if the donor suffers an incapacity.
Once a power of attorney has been completed and signed, it is valid and can be used. The power of attorney does not have to be stamped or registered anywhere. It is only necessary to deposit a power of attorney to deal with land (at the Lands Titles Office) or shares (with the company's share register). However, some financial institutions (banks or credit unions) may want to record the fact that a person has appointed an attorney or may request to have a copy of the power of attorney document - without this, it can sometimes be difficult for the attorney to be able to exercise their powers.
A power of attorney may be created for a certain period of time only, or can continue to operate until the death of the donor. In general, a power of attorney operates from the date on which it was signed [Powers of Attorney and Agency Act 1984 (SA) s 5].
A general power of attorney can simply state a commencement and ending date.
It is possible to delay the time when an enduring power of attorney is to come into effect by the use of careful wording. For example, the official 'Enduring Power of Attorney' form gives an option as to when the enduring power of attorney will become operational by stating:
This form is to become effective:
Choosing the second option means the form will not be effective until the person becomes legally incapacitated. However, deciding when someone becomes legally incapacitated can be a complex legal question.
A power of attorney completed in South Australia may not be recognised outside the State. Whilst there are provisions to recognise enduring powers of attorney in all states and territories, the situation is different with general powers of attorney.
Special care must be taken when making a power of attorney to be used for interstate or overseas assets. For interstate assets, it is suggested a person make a power of attorney according to the other State's legislation, in other words using a form from that state. All states in Australia have power of attorney forms available similar to those in use in South Australia.
To cover overseas assets, the power of attorney must be broad enough to comply with the laws of the relevant country and the signature of the donee should be witnessed by a notary public, who is a lawyer with the power to sign documents which have international recognition. A notary public will charge for witnessing documents. A list of notaries public is available from the Law Society of South Australia.
The notary public signs and places an impressed seal on the document. The power of attorney must then be sent to the Department of Trade and Foreign Affairs, which seals the document and certifies that the signature of the notary public is that person's true signature.
The power of attorney must then be taken to the consulate or trade commission of the country where it is to be used. The consulate or trade commission then certifies the signature of the Foreign Affairs officer who signed the certificate.
Once these steps have been taken, the document can be used in a country where the signature of the Department of Foreign Affairs officer has been certified, as long as the wording of the document complies with the law of the relevant country.
It is worthwhile to ask the advice of the relevant consulate or trade commission as to the form and wording of an overseas power of attorney before starting this process.
A power of attorney has the potential to be very dangerous in the wrong hands so clearly the best safeguard is to choose a donee who is very trustworthy. Although it is a criminal offence to misuse a power of attorney, for example to take money or to not use money in the person's best interest, it may be difficult to detect the crime. With an enduring power of attorney, the donor may be incapacitated and may not be capable of discovering the crime. There is no official checking done to ensure that donees are doing their job properly. If a person makes a power of attorney with no conditions, the donee is able to sell, mortgage or give away all that donor owns.
The following suggestions may help a person to safeguard their interests.
The most important rule in selecting to whom to appoint as an attorney is - choose carefully. It should be someone trustworthy who can act in the donor's best interests at all times (see Safeguard your finances publication from Alliance for Prevention of Elder Abuse website).
A donor can nominate more than one donee if they want to. If the donor chooses to have two or more people listed as donees, they can specify that they act jointly (all donees must sign) or jointly and severally (either of the donees can sign independently of each other).
If the donor decides to have more than one donee, it is important that those people can work together.
The donee must keep full and proper records of everything he or she does, and must be seen to be acting in the best interests of the donor at all times. Failure to keep these records is an offence with a penalty of up to $1000 [Powers of Attorney and Agency Act 1984 (SA) s 8]. A donee who acts improperly can be held personally responsible to pay for any losses caused, and can even be found guilty of a criminal offence.
A donee cannot be paid for work done on the donor's behalf, except any out of pocket expenses directly connected with carrying out the power of attorney. Receipts should be kept to prove these costs. A donee may do all the things authorised in the power of attorney, but may not exceed the authority given in the power of attorney. The donee only has the power to deal with the financial matters, and does not have the power to give consent to medical treatment for the donor.
Where a donee acts on a reasonable interpretation of the wording of the power of attorney, the donor is bound by the acts of the donee and the donee is protected. A donee who acts on an unreasonable interpretation of the wording of a power of attorney can be sued by those he or she deals with for breach of warranty of authority. In this case the donee's acts will not affect the donor and any property disposed of when there was clearly no authority for it in the power of attorney can be recovered. If there is doubt as to the wording of a power of attorney, seek legal advice.
By agreeing to act as a donee, the donee is not accepting financial liability for the donor, for example, a donee does not have to pay a donor's bills from their own pocket. Rather, a donee pays the donor's bills from the donor's own money. If there is not enough money to pay all the bills, the donee is not personally liable but may make other necessary arrangements.
For details on the duties of an Enduring Power of Attorney see the Alliance for Prevention of Elder Abuse's pamphlet entitled Duties and Responsibilities of your Enduring Power of Attorney.
A power of attorney ceases to operate:
There is no specific form to revoke a general power of attorney; but a donor should put something in writing making it clear that the power of attorney is revoked.
There is a form which can be used to revoke an enduring power of attorney. It is available from the SA Gov - Power of Attorney website. It can also be located in the Enduring Power of Attorney Kitput out by the Legal Services Commission and the Office of the Public Advocate.
Notice of revocation
If a general power of attorney has been deposited with the Lands Titles Office, a written revocation of that power should also be given to the Lands Titles Office to place on file [Real Property Act 1886 (SA) s 157].
The enduring power of attorney revocation form must be lodged with the Lands Titles Office.
Revocation forms must also be shown to each of the banks, companies or other registries where the power of attorney has been previously noted, produced or registered, in order to give notice that the attorney has ceased to have any authority to act on the former donor's behalf.
Can the donee of an enduring power of attorney cease to act?
If the donor of an enduring power of attorney becomes legally incapacitated, for example mentally ill, or intellectually disabled, or unable to communicate in any way, the enduring power of attorney will continue to be effective. In these circumstances a donee can only cease to act:
An administrator appointed by SACAT has power to vary or revoke the Enduring Power of Attorney (see Administrators - their powers and duties). Unless and until the enduring power of attorney is revoked, it remains suspended and ineffective. However, it can commence to operate again if the administration order is ever discharged.
Actions by the donee after the death of the donor
If a donor dies, or, in the case of a general power of attorney, becomes legally incapacitated, anything done by the attorney on behalf of the donor before she or he knows of the death or legal incapacity will be valid [Powers of Attorney and Agency Act 1984 (SA) s12(1)]. As a safeguard, when exercising a power of attorney, a donee may wish to make a statutory declaration that no notice of death (or legal incapacity in the case of a general power of attorney) has been received. This can be done at the time of exercising the power or at a later time.