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A general power of attorney is a legal document that allows a person (usually called the "principal" or the "donor") to nominate one or more persons (called "attorneys") to act on their behalf.
A general power of attorney gives the attorney the authority, if the principal chooses, to manage the principal's legal and financial affairs, including buying and selling real estate, shares and other assets for the principal, operating their bank accounts, and spending money on their behalf.
A power of attorney is different from a will. A power of attorney only operates while the principal is alive. If the principal dies, then the attorney is no longer able to use the power of attorney document in order to access the principal's bank account. By contrast, a will only starts operating after the principal dies.
A power of attorney also does not allow the attorney to make decisions about the principal's lifestyle or health. In order to deal with these matters, a separate document would also need to be prepared. This document varies from one state or territory to the other, but is often called something to the effect of "appointment of enduring guardian", or "advanced health directive".
Difference Between Enduring Power of Attorney and General Power of Attorney
This general power of attorney is also different from an enduring power of attorney. A general power of attorney ceases if the principal loses their mental capacity after having created the power of attorney. An enduring power of attorney on the other hand continues after the principal loses their mental capacity (and cannot be revoked by the principal after they have lost their mental capacity). Therefore, an enduring power of attorney is often prepared by people who want to get their affairs in order in case of a deterioration in health (for example, so that in case they suffer from dementia, their attorney can continue paying their bills). A general power of attorney, however, will cease if the principal suffers from dementia.
Instead, a general power of attorney is useful, for example, if the principal is trying to sell their house while also travelling overseas. By preparing a general power of attorney ahead of time, they can have a trusted friend or family member in Australia sign all of the documents that the principal would ordinarily sign in order to sell the house, meaning that the sale can go through without delay. If the person preparing this document is seeking an enduring power of attorney, then they may need to obtain legal advice in the relevant state or territory.
Who Can Be Appointed As Attorney
Any form of power of attorney is a very important document, as it gives a lot of power to any person named as an attorney. Therefore, the principal should think carefully about who they appoint as an attorney, and only appoint people who they trust, who are over 18 years old, and who are capable of handling the principal's financial affairs. There is potential for a power of attorney to be abused by an untrustworthy or incompetent attorney, for example by taking money from the principal's bank account.
If the principal or any other person has concerns about the effect of this document, then they should seek legal advice.
Limiting the Power of Attorney
It is also often possible to limit the powers that are granted to an attorney under a general power of attorney. For example, using the example above, if the principal only needs the attorney to help with selling the house while the principal is overseas, then the powers given to the attorney may be limited so that the attorney can only do things that relate directly to the sale of that house. Alternatively, in some cases, a power of attorney can be created so that it only operates between two dates.
An attorney must act in the best interests of the principal, and there are penalties for attorneys who fail to do this. If the principal ever has concerns that the attorney may be breaching their obligations, then the attorney should seek legal advice and/or should consider revoking the power of attorney.
How to use this document
The first step in preparing this document is for the principal to think carefully about an appropriate person (or several people) to appoint as an attorney. The principal should think carefully, and make sure that anybody they appoint as an attorney is trustworthy, over 18 years old, and able to manage financial matters responsibly. In most cases, it is appropriate for the principal to speak to the attorney to make sure that they are happy to take on the role.
The principal will also need to think about whether they are appointing the attorney for a specific period (for example, between two dates or until a specific event occurs), or for a specific purpose (for example, to only deal with selling the principal's house). If appointing more than one attorney, the principal should also think about whether they will appoint the attorneys jointly (meaning they cannot do anything with the principal's property unless they both agree), jointly and severally (meaning either one of them can deal with the principal's property, without the other one agreeing), or whether one is being appointed first and the other one is only being appointed as a backup.
The document should then be prepared by adding all of the relevant details where required. If some of those details are not available at the time that the document is being prepared, they can be added by hand later. However, they will need to be added before the document is signed.
In some states and territories, there are additional steps to take once the form is printed and signed. For example, in some states and territories, if certain parts are left out of the form, then they need to be crossed out and initialled by the principal. Instructions about this are included on the final document. In some other states and territories, if the document is being lodged at the Land Titles Office, it needs to be submitted with a cover sheet. If a cover sheet is required, it is also provided with the document. Therefore in any event, the person preparing this document will need to carefully follow any instructions in preparing the document and/or on the completed form.
In some cases, but not all, a general power of attorney also needs to be lodged at the Land Titles Office (or equivalent office) in the relevant state or territory. Therefore, the person preparing this document should review any instructions or directions that appear on the completed form, or if necessary, make their own enquiries with the Land Titles Office (or equivalent office).
If the document is being lodged at the Land Titles Office (or equivalent government office in the relevant state or territory), then there may be additional formalities to comply with. In most cases, there is also likely to be a lodgement fee to pay. Therefore, if lodging the form at the Land Titles Office (or equivalent), then it will be necessary to comply with any of these requirements. Further information about these requirements is available from the Land Titles Office (or equivalent) in the relevant state or territory.
Each state and territory has a Powers of Attorney Act and associated Regulations. In order to be legally effective, this general power of attorney will need to comply with the Act and Regulations in the state or territory where it is going to be used.
The laws regarding powers of attorney, including the laws about how to create a power of attorney, vary from one state or territory to the next. In several jurisdictions, a specific form needs to be used, and we have provided links to those forms where appropriate.
In most cases, if the principal wants to use a power of attorney in several different states or territories, they may either have to prepare a separate power of attorney in each relevant state or territory, or go through a process to have their power of attorney recognised in the subsequent state or territory.
The Act and the Regulations set out the rules for how to prepare a power of attorney. They also set out various rules about how an attorney must behave (and set out penalties for attorneys who use the power of attorney inappropriately).
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Other names for the document: Power of Attorney, Power of Attorney (Non-Enduring), Power of Attorney (General), Power of Attorney - General, Power of Attorney - Non-Enduring