How to set up an enduring power of attorney

A general power of attorney authorises someone to act for you and ends automatically if you lose capacity. It is used for convenience — a property settlement while you are overseas, a business transaction you cannot attend. It is precisely useless for the situation people are usually worried about.

An enduring power of attorney is the version that keeps working after you lose capacity. That single word, enduring, is the whole point of the document, and the reason it has extra formality attached to it.

It is not a will. It confers no authority after death; at the moment of death the attorney's power ends and the executor's begins. Appointing the same person to both roles is common and sensible, but they are separate appointments in separate documents.

It is not a guardianship order. Guardianship and financial administration orders are made by a state tribunal, on application, usually because no enduring appointment exists. A tribunal chooses the decision-maker; an enduring power of attorney means you chose.

It does not take away your own decision-making. Unless the document says it operates only on incapacity, you continue to make your own decisions and the attorney acts alongside you. Many people set it up so the financial power begins immediately, which is convenient, and rely on the attorney to act only when needed.

It is not accepted everywhere as of right. Banks apply their own verification and often want the original or a certified copy and their own forms completed. Centrelink and the ATO do not act on a power of attorney at all — they use their own nominee and authorised representative arrangements, which have to be set up separately while the person can still authorise them.

It does not survive being made badly. A form witnessed by the wrong person, missing the attorney's acceptance, or not registered where registration was required, is likely to be refused at exactly the moment it is needed.

Financial and property decisions cover operating bank accounts, paying bills, receiving income, dealing with investments, running a business and buying or selling property. Personal and lifestyle decisions cover where you live, who you live with, what services you receive and, in some states, consent to medical treatment.

How those powers are packaged depends entirely on which state you are in, and the packaging is the thing people assume is national and is not.

In New South Wales the two are separate documents: an enduring power of attorney covers financial and property matters, and an appointment of enduring guardian covers health, lifestyle and personal decisions. Making the first without the second is the standard gap.

In Victoria a single enduring power of attorney can cover financial matters, personal matters, or both, made under the state's powers of attorney legislation. Medical treatment decisions sit under a separate appointment of a medical treatment decision maker.

In Queensland one enduring power of attorney form covers both financial matters and personal or health matters, and you can start the financial power immediately while the personal power begins only on incapacity.

South Australia, Western Australia, Tasmania, the Northern Territory and the Australian Capital Territory each have their own instruments, terminology and witnessing rules. The public advocate, public guardian or public trustee in each jurisdiction publishes the correct forms, and they are free.

Documents made in one state are generally recognised in another, but only to the extent the power could have been given under the local law, and land dealings still have to satisfy the local titles office. If you move interstate permanently, remaking the document under local law is the safer course.

An advance care directive is a further, separate document recording your wishes about treatment rather than appointing a person. It complements the appointment rather than replacing it, and in some states the two are combined in a single form.

The attorney must be an adult with capacity, and must not be bankrupt if they are to handle financial matters. Beyond that the law imposes almost nothing, which is why the choice carries so much weight.

Trustworthiness is necessary and not sufficient. The attorney also needs to be organised enough to keep records, available enough to act promptly, geographically close enough to deal with a house or a bank, and robust enough to withstand pressure from other family members who disagree with a decision.

You can appoint more than one. Jointly means they must all agree and all sign — the safest structure against misuse and the slowest in practice. Severally means any one of them can act alone, which is fast and offers no cross-check. Jointly and severally is a middle position that in practice behaves like severally.

Appointing two attorneys jointly is the single most effective structural safeguard available in this document, because misuse of a power of attorney is overwhelmingly committed by one person acting alone and unobserved. The cost is friction, and if the two people cannot cooperate the arrangement stalls at the worst possible time.

Name a substitute. This is the omission that causes the most trouble in practice, and it is entirely avoidable. A person who appoints their spouse of similar age as sole attorney, with no substitute, has protected themselves against a risk that is highly correlated with the one they were worried about — couples of the same generation commonly lose capacity in the same period, and the death or incapacity of a sole attorney leaves you with no document and no capacity to make a new one.

Consider whether a professional is appropriate. State trustees, public trustees and private solicitors will act as attorney for a fee, which is worth considering where there is no suitable family member, where the estate is complex, or where family conflict is likely. Fees are charged against your assets and should be checked before appointment.

Talk to the person before you name them. They have to accept the appointment in writing, and someone learning about the responsibility for the first time in a crisis is not a good start.

Tell your family who you appointed and why. A large share of tribunal applications about powers of attorney are brought by relatives who were surprised by the choice.

Get the correct form for your state from the public advocate, public guardian, public trustee or state government website. The forms are free. Do not use a generic template downloaded from a commercial site, because the witnessing and certification requirements are state-specific and a defective form fails when it is used.

Decide the scope. Financial only, or financial and personal? Immediate effect, or only on loss of capacity? Any limits — for example, no power to sell the family home, or no power to make gifts beyond a stated amount? Limits are enforceable and are one of the few controls available.

Decide the structure: one attorney or several, jointly or severally, and who the substitutes are. Write the substitutes in. This is the step most often skipped.

Consider getting legal advice, particularly if you have a business, a self-managed super fund, a blended family, property in more than one state, or any expectation of conflict. A solicitor's fee for a straightforward appointment is modest against the cost of a contested tribunal application.

Sign in front of the witness your state requires. Prescribed witnesses vary — a lawyer, a registrar of the local court, a justice of the peace or another authorised person — and some states require the witness to certify that they explained the document and that you appeared to understand it. Using the wrong witness invalidates the document.

Have each attorney sign their acceptance. The appointment does not operate until they do.

Register the document with the land titles office in your state if the attorney may need to deal with real property. In most states an unregistered power of attorney cannot be used to sell or mortgage land, and registering it after capacity has been lost is not always possible.

Distribute copies. Give the original or a certified copy to each attorney, tell your solicitor and your family where the original is held, and lodge copies with your bank in advance if you can — banks are far easier to deal with before the document is needed than after.

Set up the separate arrangements that a power of attorney does not cover: a Centrelink nominee or acting arrangement with Services Australia, and authorisation with the ATO or your tax agent. These must be done while you can still authorise them.

An attorney must act honestly and with reasonable care, in your interests rather than their own, and within any limits in the document. In several states the duties are set out expressly in legislation, and breaching them can result in the attorney being removed and ordered to compensate the estate.

They must keep your money and property separate from their own, and keep records of dealings. Mixing funds is the single most common breach and the one that makes everything else difficult to unpick.

Conflict transactions — using your money to benefit the attorney, their family or a business they are involved in — are generally prohibited unless the document expressly authorises them or a tribunal approves. Paying a family member for care from the donor's funds is a conflict transaction and should be authorised in advance if it is intended.

Gifts are restricted. Most jurisdictions permit only modest gifts of a kind you would ordinarily have made, such as a birthday present of a customary amount, and prohibit larger transfers. Gifting property to reduce a future aged care means test is not a decision an attorney can make on their own initiative.

An attorney cannot make or change your will, vote for you, consent to marriage, or make decisions the law reserves to you personally. Statutory wills are possible in some circumstances but require a court, not an attorney.

They should consult you and give effect to your wishes as far as possible even after capacity declines, rather than substituting their own preferences. Supported decision-making — helping you make your own decision — takes precedence over making it for you where that is achievable.

The powers end on your death, on revocation, on the attorney's death, resignation, incapacity or bankruptcy where relevant, or on a tribunal order. From death, the executor takes over and the attorney has no further authority, including over the funeral.

You can revoke an enduring power of attorney at any time while you have capacity. Do it in writing, notify each attorney in writing, notify anyone relying on it including banks, and notify the land titles office if the document was registered. An unnotified revocation is a practical problem rather than a legal one — third parties who deal with the attorney in good faith are usually protected.

Review the document after any significant change: a separation or divorce, the death of an attorney, a move interstate, the sale or purchase of property, or a fall-out with the person named. In some states a divorce revokes an appointment in favour of a former spouse and in others it does not, which is a good reason not to rely on it happening automatically.

If you are concerned that an attorney is misusing their power, the state tribunal — NCAT, VCAT, QCAT or the equivalent — can review the appointment, require the attorney to account, remove them and appoint someone else. The public advocate or public guardian in your state investigates concerns and is the right first call. Reporting suspected financial abuse of an older person does not require proof.

If no enduring appointment exists and capacity is lost, someone applies to the tribunal for a guardianship order, a financial administration order, or both. The tribunal decides who is appointed, which may be a family member, the public guardian or the state trustee. Hearings are usually free to apply for, but the process takes time, is open to competing applications from family members, and the outcome is not yours to control.

That gap has practical consequences immediately. Without an appointment, nobody can lawfully pay bills from the person's account, sell a house to fund care, negotiate with a landlord, or sign an aged care agreement. Bills go unpaid while the tribunal process runs.

The document is free to make, costs nothing to hold, and can be revoked at any time while you have capacity. Against that, the cost of not having one is measured in months of tribunal process at the worst point in a family's life. Everyone over eighteen with any assets or dependants should have one.

Finally, keep it findable. A perfectly drafted appointment locked in a safety deposit box that only the attorney can open with the document they cannot get is a genuinely common outcome.