Understanding the Difference Between Power of Attorney and Enduring Power of Attorney

When it comes to planning for the future, knowing your legal options is essential. In Australia, assigning decision-making powers to someone you trust can protect your interests during unexpected circumstances. This is where a Power of Attorney or an Enduring Power of Attorney comes in. Though the terms may sound similar, there are important legal distinctions between the two.

Let’s explore the difference between power of attorney and enduring power of attorney and how each applies in different situations.

What is a Power of Attorney?

A Power of Attorney (POA) is a legal document that allows you to appoint another person (your attorney) to make financial and legal decisions on your behalf.

This may be used if:

• You’re travelling overseas and need someone to manage bills or property.
• You’re physically unable to attend to your affairs.
• You want assistance managing complex transactions.

However, this authority ends if you lose mental capacity, such as from a stroke or dementia. In such cases, your appointed attorney can no longer act on your behalf unless an Enduring Power of Attorney was already in place.

What is an Enduring Power of Attorney?

An Enduring Power of Attorney (EPOA) is much like a regular POA, but with one key difference: it continues to be valid even after you lose mental capacity.

This makes it ideal for long-term planning for the future, particularly in case of:

• Progressive illnesses (e.g. Alzheimer’s).
• Age-related decline in decision-making ability.
• Accidents causing serious brain injury.

An EPOA ensures someone you trust will continue to manage your financial and legal matters, giving peace of mind to you and your family.

Key Differences Between the Two

Understanding the legal distinction can help you choose the right tool:

• Activation: A POA becomes active upon signing. An EPOA can be set to activate immediately or upon mental incapacity.
• Validity: POA is only valid while you have mental capacity. EPOA remains valid even if you lose capacity.
• Scope: Both cover financial and legal matters, but not medical or lifestyle decisions.
• Termination: Both cease upon death.

In Australia, medical or lifestyle choices are handled through different documents, such as an Advance Care Directive or Medical Treatment Decision Maker.

Making the Right Decision

While both documents offer legal protection, your choice depends on your circumstances. If you're only seeking temporary help, a POA may suffice. However, for broader, long-term security, an EPOA is often more appropriate.

Legal advice can ensure your intentions are clearly documented and legally enforceable. Choosing the right person as your attorney is equally important. They should be trustworthy, financially responsible, and capable of acting in your best interests.

Don’t Leave It Too Late

Many people put these decisions off until it's too late. But acting early ensures your wishes are respected, even if you're no longer able to express them. You can also tailor each document to specific instructions or limitations, such as selling property or accessing certain bank accounts.

It's always best to ensure your affairs are managed well ahead of time, especially when it comes to future incapacity.