The ‘Power’ in Power of Attorney

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The ‘Power’ in Power of Attorney

Written by: Karlene Wightman l Legal Team

 

It’s a common myth that when you divorce or separate from your partner that your Powers of Attorney are no longer valid.  It’s also a common myth that if you change your mind because of a falling out between someone you have named as your Power of Attorney that you don’t need to worry about changing it because it can’t stand up in Court.  We’re here to bust that myth because the truth is that once you have signed your Powers of Attorney, regardless of what happens to you or your circumstances, unless they are updated – the power that you have given your Powers of Attorney doesn’t change.

What Is Power of Attorney?

Put simply, Powers of Attorney are documents that appoint a person to act for you while you are alive but, most commonly, when you have lost your own mental capacity to make decisions for yourself.  Briefly, there are two types of Powers of Attorney:

  1. Enduring Power of Attorney; and
  2. Appointment of Medical Treatment Decision Maker.

Enduring Power of Attorney

An Enduring Power of Attorney has two facets:

  1. Financial Power of Attorney: this allows someone else to make financial decisions on your behalf; or
  2. Personal Power of Attorney: this allows someone else to make lifestyle decisions on your behalf.  Examples of such decisions could be where your live, who you live with, who sees you, and who doesn’t see you (basically all decisions that would be made by an adult with respect to a minor child).

In both cases, the power can commence either:

  • Immediately, which means that as soon as you sign the document, the person(s) you have appointed can act on your behalf; or
  • When you cease to have your own mental capacity to make decisions, which means that a doctor must provide a written report to confirm that you no longer have decision-making capacity.

You can also appoint up to four people in various configurations.  Briefly, the options are:

  1. Jointly or severally, which means that the persons you appoint can make decisions independently of each other.  They do not need the permission of the other attorneys;
  2. Jointly, which means that all of the people that you have appointed must agree on every decision; or
  3. By majority, which means that the decision is made by a ‘majority rules’ vote.

Usually, the person or persons you choose to make your financial decisions will also be appointed to make your personal lifestyle decisions.  However, this is not always the case and can be dealt with differently in the document.

Appointment of Medical Treatment Decision Maker

An appointment of a Medical Treatment Decision Maker allows you to appoint up to four people (labelled as decision maker 1, 2, 3, 4 respectively) who will make decisions for you only if you have lost the capacity to make decisions for yourself.  These decisions are limited to medical in nature (e.g. do you stay on life support, have a particular surgery, blood transfusion or receive particular medication).

If you do not have an Appointment of Medical Treatment Decision Maker, the legislation sets out who can make the decision for you.  It could be the case that you are happy with the legislative order.  However, this does not suit many people, thus making this Power of Attorney very important.

Are Powers of Attorney Still Legally Binding if Revoked? 

Power of Attorney is only revoked by either:

  1. Making a new Power of Attorney which appoints new attorneys to act on your behalf;
  2. Completing a “revocation” thereby returning you to the situation where you have no Powers of Attorney in place.

Legal Issues With Divorce or Separation

Power of Attorney is not automatically revoked by marriage, divorce or separation.  If you do not make a new Power of Attorney, a former spouse or partner (even after separation) still would have the power to act on your behalf in financial, personal and medical situations.

Often people assume that once a marriage breaks down, their duties have ended.  However, there have been many situations where an appointed attorney uses their Power of Attorney inappropriately.  This is especially the case in financial matters, where an attorney has access to their ex-spouse/partners’ bank accounts.  It is extremely important that as soon as a separation takes place, you make an appointment with a lawyer to review not only your Will but also your Powers of Attorney.

One important point about revoking a Power of Attorney is that it is not good enough to simply make a new Power of Attorney (or revoke your current one).  For revocation to be complete, you must notify the person(s) who are no longer able to act as your Powers of Attorney.  This can be quite distressing to many people, as they do not want to further strain their current relationship with their ex-spouse/partner, and would rather revoke the Powers of Attorney without them knowing.  However, if the ex-spouse/partner does not know that you have revoked the documents, there would be no action to take against them if they use the document unless, of course, they act inappropriately.

Another point to note that is once you make a new Power of Attorney it should be lodged with the appropriate institutions (i.e. banks, doctors etc).  That way, it is almost impossible for an ex-attorney to inappropriately use the document.

Are There Legal Services Available If You Lose Capacity But Have Not Revoked a Power of Attorney?

If you lose your capacity but have overlooked revoking a Power of Attorney by appointing an ex-spouse or partner, there are avenues that family members can take to have the Power of Attorney revoked.

The only option in the above circumstances is lodging an application with VCAT to have the Powers of Attorney revoked and an administration and/or guardianship order made.  When a matter is lodged with VCAT, an interested person who wants to take on the responsibility makes the application, but it is ultimately up to VCAT to decide who is appointed.  When you make the application, all ‘interested parties’ (such as children, siblings etc.) must be notified and given the right to attend the hearing.  They can challenge your application and perhaps ultimately be appointed themselves.

While VCAT is certainly an avenue that we would recommend a person take if you had lost your capacity and had not revoked your Power of Attorney, it is an arduous process and you will not always get the outcome that you are looking for.  It is a much better option to ensure that anytime your circumstances or situation changes, you review your Will, Powers of Attorney and Estate Planning.

Canny Legal – Expert Legal Advice

At Canny Legal, we do not just look at each document individually.  We need to look at your whole situation so that we can get a broader understanding of your circumstances and tailor your Will, Powers of Attorney and any Binding Death Benefit Nominations accordingly.

We cannot stress enough that you should never make these decisions and put them away and never look at them again.  They should always be reviewed every two to three years, or when your circumstances change before then.

Get in touch with our Legal Team to ensure that you are protected and that your wishes are documented and up to date.

Don’t have time to come in and see us, but know that you need to update your Will?  Jump online to see if one of our Online Wills is suitable for you – we are here to make your life easier, not harder and we will do everything we possibly can to make sure that you’re protected.

Pictured, Special Counsel Karlene Wightman standing with one hand on her hip wearing a vibrant pink dress

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