Understanding Power of Attorney

A power of attorney is a legal document that authorises someone to make legal and financial decisions on your behalf during your lifetime. 

Definition and Different Types of Power of Attorney

A power of attorney is a legal document that allows you to appoint someone else to make decisions regarding your financial and legal affairs. There are several types of powers of attorney, each with distinct functions:

• General Power of Attorney: Under a General Power of Attorney, a person (the Principal) appoints another person (the attorney) to make financial and legal decisions while the Principal still has the mental capacity to make their own decisions. For example, if the Principal is travelling overseas and needs someone to make decisions locally while they are away. The powers delegated under a General Power of Attorney cease if the Principal loses capacity.
• Enduring Power of Attorney: Unlike a General Power of Attorney, an Enduring Power of Attorney continues to operate after the Principal loses the capacity to make decisions. An Enduring Power of Attorney can be helpful when it comes to long-term planning and ensures your best interests are protected if you become incapacitated due to age, accident or illness. 

Anyone over the age of 18 with sufficient capacity can execute a Power of Attorney. 

Roles, Responsibilities, and Scope of Power of Attorney

The roles and responsibilities of a power of attorney can vary based on the type and the specific instructions in the legal document:

• Making Financial and Legal Decisions: An appointed attorney can manage your financial affairs, such as paying bills, buying and selling property, managing investments, and completing legal or financial-related documents on your behalf. This role is vital in ensuring your financial stability when you cannot make decisions yourself, such as when you are out of the jurisdiction or have lost capacity due to age or illness. 
• Trustee: In some cases, an attorney may act as a trustee, managing assets placed in a trust according to the terms set out in any relevant documents, such as Trust Deeds. 
• Acting in Best Interests: The appointed attorney must always act in your best interests, making decisions that benefit you and adhering to the duties outlined in the legislation in the relevant jurisdiction, such as the Powers of Attorney Act 2003 (NSW).

Understanding Wills in Estate Planning

Each estate plan should be tailored for the particular individual. However, an estate plan usually consists of at least three documents: a will, an Enduring Power of Attorney form and an Enduring Guardianship Form. 

During a person’s lifetime, the Power of Attorney is a document that allows a Principal to give someone else the power to manage the Principal’s financial and legal affairs, and the Enduring Guardianship Form will operate to allow someone else (the enduring guardian) to make medical and lifestyle decisions on behalf of the Principal if the Principal is unable to make decisions for themselves due to losing capacity. The Enduring Guardian can decide what medical treatment you receive, sometimes called a medical power of attorney. 

When the Principal dies, the powers under the Power of Attorney and Enduring Guardianship forms cease, and the Principal’s last will and testament come into operation, setting out how their estate will be distributed. Wills and powers of attorney forms have separate and distinct purposes. 

Legal Limitations of a Power of Attorney in Changing a Will

Whether general or enduring, a power of attorney cannot change a will. The authority granted by a power of attorney document is limited to financial and legal affairs and does not extend to altering testamentary documents.

In New South Wales, the Powers of Attorney Act 2003 (NSW) governs powers of attorney. The Power of Attorney document must be registered with the NSW Land Registry Services if real estate transactions are required. The appointed person, the attorney, acts on your behalf in legal and financial matters but does not have the authority to amend or revoke a will. If an attorney appointed under a power of attorney attempts to change a will, such an action could be considered fraudulent and have serious legal consequences.

Can a Power of Attorney Change a Will in Australia?

In Australia, a power of attorney cannot change a will. This is a fundamental limitation of the power of attorney document. The purpose of appointing an attorney is generally to manage your affairs on your behalf when you are unable to make decisions, such as in the event of incapacity. However, the authority to make or change a will remains solely with the testator (or the Court in some cases). 

If you need to make changes to your will, you should consult with an experienced wills and estate law solicitor. Obtaining advice will help ensure that the proposed amendments reflect your true intentions and are valid, drafted, and executed. It is important to appoint one or more persons you trust to act as your attorney, but remember that this role ceases upon your death. At that point, the executor named in your will has the right (but not obligation) to administer and distribute your estate.

Ensuring your will is up to date and safely stored and that your powers of attorney are registered and clearly documented provides peace of mind that your interests will be protected and your wishes will be honoured.

Can the Court change a person’s will during their lifetime?

Although a power of attorney does not have the power to change a person’s will, in some States of Australia, the Supreme Court has the power to change a person’s will while they are alive, for example, where a person is incapable of making a will, such as a minor or where a person lacks testamentary capacity due to age or disability. This is called a ‘statutory will’. Strict criteria apply when it comes to statutory wills and any person who wants a family member to change their will. Still, the person can’t because they have lost capacity, so they should contact a will and estate lawyer. 

Distinguishing Between Powers of Attorney and Executors

A power of attorney and an executor are two different roles, each with distinct responsibilities and scopes of authority. Understanding the differences between these roles is crucial in effective estate planning.

Power of Attorney is Generally Used for Managing Affairs While You Are Alive

A power of attorney is generally used to appoint someone to manage your legal and financial affairs while you are still alive but unable to make your own decisions. This legal document, both general and enduring, authorises the appointed person to make decisions on your behalf while you are alive. The person you appoint should be trustworthy and capable of managing your financial and legal matters responsibly.

Legal Implications of Unauthorised Changes to a Will

Unauthorised changes to a will can have significant legal implications and may lead to disputes and challenges in Court.

Only the Testator Can Legally Change Their Will

A will can only be legally changed by the testator, the person who created the will. Any unauthorised attempt by a power of attorney or another individual to alter a will could constitute fraud. 

Potential Consequences of Unauthorised Changes

The changes will not be legally recognised if an unauthorised person attempts to change a will without the testator’s knowledge and approval. This can lead to legal disputes among potential beneficiaries. Where the validity of a will is in question, the Court may need to intervene to determine the validity of the will and any changes made to it. To avoid these complications, it is important to keep the original will and any formal amendments, known as codicils, in a safe location. 

Steps to Legally Change a Will

When you need to make changes to your will, following the correct legal procedures is essential to ensure the changes are valid and enforceable.

Consult with a Qualified Legal Professional

Before making any changes, it is important to consult with a qualified legal professional, such as an experienced wills and estate lawyer. At Empower Wills and Estate Lawyers, we can provide legal advice and ensure that the changes comply with the relevant laws and regulations.

Create a New Will if Necessary

A person wanting to change their will can usually do a new one or execute a codicil. 

It is usually preferable to prepare a new will, but in some select cases, it may be more convenient to prepare a codicil that amends an existing will without having to rewrite the entire will. 

In either case, it is important to comply with any formal requirements concerning wills in the specific jurisdiction.

Store Documents in a Safe Place

After executing a new will or codicil, it is important to store the original documents in a safe place. You can (but do not have to) inform your executor and trusted family members about the location of these documents, or you can give them a certified copy of the documents.  Wills can also be deposited with the NSW Trustee and Guardian or public trustee of the relevant jurisdiction.

Secure Your Estate Plan with Empower Wills and Estate Lawyers in Sydney, NSW

If you have an inheritance question, need to apply for probate, have a draft document that you would like us to consider, or require representation in a will dispute or will contest the matter, contact Empower Wills and Estate Lawyers in Sydney, NSW now on 1300 414 844 to discuss your situation with one of our expert solicitors. We offer flexible fee structures tailored to your financial affairs and, in some cases, “no win, no fee” agreements. 

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Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.