Understanding Power of Attorney and Knowing Its Uses
A Power of Attorney is a legal document that gives the power to another person to make decisions on your behalf. If you sign a power of attorney in the favour of another person, then that person will have the authority to take certain actions and make certain decisions on your behalf if you are incapable of doing so. There are many different types of powers of attorney that can be used for specific purposes.
The Use of Power Of Attorney
There are several situations where a power of attorney can be extremely useful. Here is a look at some of them:
- To close important business deals: As a business owner, you may be offered a very lucrative business deal that needs to be signed at a specific location and on a specific date. However, if you are unavailable on that date because of prior commitments, then you could stand to lose out on the deal if you cannot close it on time. In such a situation, you can create a specific power of attorney for this deal and authorise another person to sign the deal on your behalf. A power of attorney is a legally recognised document and hence no one should have any objection to another person signing the deal on your behalf with a proper power of attorney in place.
- By aging people to manage their finances: A person who has become old and does not want the hassle of managing their money can create a power of attorney to authorise their spouse or children to make such decisions on their behalf. If such an aging person does not want to give up absolute control of their finances, they can specify certain financial tasks in their power of attorney rather than keeping it general.
- To make critical medical decisions: Many people use a power of attorney to authorise a trusted person to take vital medical decisions on their behalf. For example, if you meet with a serious accident and you do not regain consciousness for many days, there could be several decisions that need to be taken that could make the difference between life and death. Therefore, if you have a power of attorney in place that gives the power to a trusted friend, spouse or child to take medical decisions on your behalf, then you can ensure that your wishes will be carried out even if you are unconscious and not able to make those decisions yourself.
In addition to the above, there are many other situations in which a power of attorney can be useful. It may be used to close property deals on your behalf, appear for important court matters, sign and release pay checks in your absence, or for any other specific purpose that the power of attorney was created for.
Who Can Be Chosen as an Attorney?
The attorney in power of attorney is not necessarily a lawyer or an advocate but can be any trusted person who is chosen to act as an attorney on behalf of the person creating the power of attorney. Aging parents can choose their children to be their attorneys or people can choose their spouses. Often, a trusted relative, business associate, or friend may also be chosen to act as an attorney for important business and financial matters among others.
Sometimes people may not choose a relative or friend but may opt for an actual lawyer or their accountant to act as attorney for them. The different states and territories in Australia have certain age limitations for a person to act as attorney under a power of attorney. Other than meeting these age limitations and being of sane mind, there are no complex requirements that need to be met by any person so as to be appointed attorney. However, since you will be bestowing very important powers on your attorney, it is necessary to keep some vital points in mind when choosing an attorney. These points are:
- Choose an honest and trustworthy person: Your attorney will be authorised to take many important decisions on your behalf and may also be allowed to handle your financial matters. Hence, it is absolutely vital that you choose a trustworthy person to be your attorney. You should be sure that your attorney would never misuse the power bestowed on him and take undue advantage of the power of attorney. In addition to being someone you trust, the person should also be knowledgeable in the areas that they require to complete tasks in. For example, you may choose your accountant to be your financial power of attorney, but your spouse may be a better choice for medical power of attorney.
- Avoid conflict of interest: Sometimes you may end up choosing such a person as your attorney who may have a conflict of interest in your personal or business matters. If such a conflict of interest is present, your attorney could act in his best interests rather than keeping your best interests in mind. Therefore, make sure the person you choose as your attorney does not have any vested interest in your matters.
What is a Medical Enduring Power of Attorney?
When a donor creates a power of attorney to authorise someone to specifically handle medical decisions for them, then such a document is known as a medical enduring power of attorney. While other types of powers of attorney come into effect when the donor specified, a medical enduring power of attorney will only come into effect if the donor becomes incompetent. The donor may become mentally incompetent due to age or some illness, or could meet with a serious accident that leaves them unconscious for extended periods of time, in a coma, or perhaps even in a vegetative state. In any of these situations, the donor will become incapable of taking important medical decisions and this is when a medical enduring power of attorney will come into effect.
An attorney who is appointed under a medical power of attorney is also referred to as an agent. An appointed agent only has the power to take medical decisions on the behalf of the donor and may not take any financial, guardianship, or lifestyle decisions for the donor. Hence, in a situation where the donor becomes incompetent and a decision has to be taken for some medical treatment, such a decision can be taken by the agent. However, all financial decisions that arise from the medical treatment will have to be taken by another attorney who may have been authorised to do so through a financial enduring power of attorney.
What Decisions can an Agent Make?
An agent under a medical enduring power of attorney can make any and all decisions relating to medical treatment or health care of the donor. However, these decisions can be made only if the donor is mentally unable to do so. For example, if a donor meets with an accident that leaves them physically paralysed but their mental health has not been compromised in any way, then the donor can take necessary medical decisions on their own and the agent’s powers will not come into effect in this situation. However, if the accident leaves the donor paralysed as well as mentally unstable, then the agent’s powers will begin at such time.
Once a medical enduring power of attorney has kicked into effect, the attorney or agent can make the following types of decisions:
- Surgery and operations: If any surgery or operation needs to be performed on the donor to treat them, these decisions can be taken by the agent.
- Medicines and drugs: All decisions with regards to administering drugs or medicines to a sick donor can be taken by their attorney.
- Rehabilitative care: If any type of rehabilitative therapy is required to get a sick donor back on their feet, these decisions too can be made by the agent.
- Medical examinations and preventive care: There may be situations when a donor is mentally incapable of taking decisions regarding certain medical exams or preventive therapies that are required to diagnose and treat their medical condition. In such situations, important medical decisions can be taken by the agent.
In addition to taking all medical decisions, an agent under a medical enduring power of attorney also has the power to refuse any or all types of treatments on behalf of the donor. However, before an agent decides to refuse treatment, they need to be made completely aware about the donor’s condition as well as all the possible treatments that can be used on the donor. Once the agent has a thorough understanding of the donor’s condition and the treatments offered, he can refuse treatment if any of the following conditions exist:
- Treatment deemed to cause distress: If the agent believes that the treatments suggested would cause undue distress to the donor, then the agent does have the authority to refuse the treatment.
- Treatment would have been refused by the donor: If the agent believes that the treatment would have been refused by the donor were he capable of taking the decision, then the agent too can refuse the medical treatments being suggested. The underlying belief is that the treatments would not be considered as effective or necessary for the health and well-being of the donor, or would be considered unwarranted in that situation.
In order to refuse medical treatment, the attorney will have to complete a form known as the refusal of Treatment Certificate. The reasons for refusing the treatment are typically mentioned in this form.
Appointing One or More Attorneys
Creating a general power of attorney basically means giving authority to an attorney to make decisions for you. Hence, an attorney is the main aspect of any such document. When choosing an attorney, you have the choice of appointing just one attorney, or you can choose to have multiple attorneys for your power of attorney. In situations where multiple attorneys are appointed, they will need to make decisions according to your specifications. You have two main choices in this regard, which are:
- Take decisions jointly: Where more than one attorney has been appointed, you can specify that all the attorneys have to take decisions jointly. When such a directive is in place, the decision taken by the attorneys has to be unanimous and all the attorneys have to agree to a particular decision. This can be beneficial if you do not have a single person whose judgement you can trust completely. Hence, by authorising two people to take decisions together, you can ensure that a sound decision will be made.
- Take decisions jointly and severally: Multiple attorneys can also be given the power to take decisions jointly and severally. In such situations, the attorneys may take a decision jointly, or either of the attorneys can take a decision on their own. The main benefit of such a directive is if your attorneys travel a lot and both are together in one place on rare occasions. Hence, even if one of your attorneys is available, important decisions will not be left hanging.
Different states in Australia have different laws that permit the appointment of multiple attorneys. Therefore, you need to be aware of the laws in your state or territory before appointing attorneys for your general power of attorney.
By choosing the right attorney, it is thus possible to make the best use of a power of attorney for important matters relating to your business, health or your future.