If you have elderly parents, you may want to ensure they have arranged to have Powers of Attorney in place.
An Enduring Power of Attorney is an important part of estate and succession planning. It operates when a person is no longer able to make decisions for themselves, for example due to cognitive decline or illness.
Having an Enduring Power of Attorney in place makes it easier for others, such as adult children, to help their aging parents with financial or medical decisions. For example, it may become necessary to arrange for the sale of the family home to enable a move into assisted living. With an Enduring Power of Attorney in place, professionals can deal directly with you, making the process less stressful and more efficient.
Seek advice early on about which type of power of attorney is most appropriate to the specific set of circumstances.
How do you arrange for a Power of Attorney for your parents?
The person who makes the power of attorney is the principal. The person who is given the power is the attorney. For the power of attorney to be valid, it must be in writing and it must follow the strict requirements of the legislation in form, content and witnessing.
The principal must:
- Be over 18
- Be capable of making decisions (defined as the ability to understand, retain, evaluate and weigh up relevant information and communicate their decisions)
- Understand
- the nature of the document they are signing
- which powers they are granting to the attorney
- which powers they are retaining; and
- how to cancel or change their attorney or the terms of their appointment.
The attorney must:
- Be over 18
- Agree to be the attorney
- Have decision making capacity
How do you know if your parent has capacity to sign a Power of Attorney?
Legislation in Australia is based on the ‘presumption of capacity’. That means that your parent is presumed to have decision-making capacity unless someone can prove that they do not.
Even if they have been diagnosed with dementia, they may retain all or part of their decision-making capacity. If there is doubt about capacity, get in touch with their doctor and ask for a medical report.
Capacity can fluctuate. As a practical step, consider choosing a time that your parent is most likely to be alert and aware to discuss important matters.
In order to be valid, powers of attorney must be witnessed by qualified witnesses, such as a solicitor. It is also important to avoid the suggestion of undue influence by ensuring that the principal (maker of the power of attorney) has received independent legal advice about the making of the power.
If there is a question of capacity, arrange to have the paperwork signed on the same day as the medical report attests to capacity. That way there is less risk of a claim that the power of attorney is invalid.
Who decides when the person has lost capacity?
This will often be a conversation between you and your parents’ GP. If there is a conflict of opinion, you can also apply to the Victorian Civil and Administrative Tribunal (VCAT) for a decision on whether your parent can make their own decisions or whether you can step in as attorney.
To find out more about Powers of Attorney and their benefits call us on (03) 9592 3356 or email office@citypacific.com.au.
