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Power of Attorney vs. Guardianship

By Equally Wed - Posted on Wednesday, February 13, 2019

It’s not nice to think about or an easy conversation to have but it’s something we all need to be prepared for. Who is going to look after your affairs when you aren’t able to and what should you put in place to make your loved ones’ lives easier in the event that something should happen to you?

We are living longer and as a result it is more likely that you or someone you love may suffer periods of deteriorating health or declining mental capacity.

Fortunately, the law provides ways for you to make provisions to manage your finances and lifestyle; this is done by arranging a Power of Attorney and Enduring Guardianship. These two documents are very important estate planning tools. 

There are two types of Power of Attorney:  

  1. General Power of Attorney – this involves a person referred to as the ’Principal’ appointing another person to handle their financial affairs, referred to as the ’Attorney’. This type of Power of Attorney is usually limited to a certain period of time, e.g. if you go on a holiday or are unable to manage your own affairs due to a health condition. If you don’t have a specific timeframe requirement for your Power of Attorney, you would be better off arranging an Enduring Power of Attorney.  

  2. Enduring Power of Attorney - this is where a ’Principal’ appoints an ’Attorney’ to manage their financial affairs. If you own property, you can register an Enduring Power of Attorney with the Land Registry Services which will allow the ’Attorney’ to sell your property if applicable. The important point is that an Enduring Power of Attorney continues to operate when you have lost the ability to manage your financial affairs. 

For obvious reasons whom you appoint as your Attorney has to be absolutely trustworthy. You can specify when the ’Attorney’s’ appointment commences, what powers the ’Attorney’ has and providing that you have capacity, you can revoke the Attorney’s appointment at anytime. 

So, what is an Enduring Guardian? 

The law also provides a way for you to appoint someone to make lifestyle decisions for you when you have lost the ability to make these for yourself – this is known as an Enduring Guardian. 

An Enduring Guardian can help decide where you should live, what type of personal services, medical and dental treatment you would like to receive or not receive. When establishing an Enduring Guardian, you can tailor the limit of the powers as you see fit. An Enduring Guardian can only exercise their appointment when you have lost the ability to make lifestyle decisions yourself. The appointment of an Enduring Power of Attorney and Enduring Guardian is only valid while the Principal is alive and those documents cease to operate on the death of the Principal. 

What happens if you do nothing?  

If you don’t have a plan in place you or your partner will need to make an application to the Guardianship Tribunal which can be expensive and time consuming. Unfortunately, you don’t always end up with your preferred Guardian when the court is left to decide who should manage your affairs. 

Whomever makes the application with the Guardianship Tribunal, will often determine who is selected as your Guardian. This may not always be the person that you would have otherwise selected. 

We have seen situations where a Guardian has been appointed by the Court who wasn’t a family member or partner of the Principal. In one example, we have seen a legal officer of the tribunal appointed as a Guardian, which is not ideal. 

It’s important for couples and families to talk about what this means for you and how you can be best prepared in the event that life takes an unexpected turn. If in doubt, contact your solicitor to book in some time to sit down and chat about your individual situation and what steps you need to take.

Simone Townsend
Kenny Spring Solicitors
Bathurst, NSW
https://www.kennyspring.com.au

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