Powers of attorney and enduring guardianship explained

Most people know they should have a will. Far fewer realise a will only takes effect after you die, and does nothing if you are alive but unable to manage your own affairs. That is what a power of attorney and an enduring guardian are for. This guide explains both.

Why these documents matter

A will deals with what happens after death. A power of attorney and an enduring guardianship deal with what happens if you are alive but lose capacity, through illness, an accident, or age. Without them, your family may have to apply to a tribunal to be allowed to manage your affairs, which is slow, stressful, and avoidable.

In our experience this is the gap most people have in their planning. They have a will but nothing covering incapacity, which is actually the more likely event to deal with first. A complete plan covers both.

Power of attorney: your financial and legal affairs

A power of attorney is a document that appoints someone to make financial and legal decisions for you, such as operating your bank accounts, paying your bills, or dealing with property.

There are two kinds. A general power of attorney operates only while you have capacity, and is often used for a limited time or purpose, such as while you are overseas. An enduring power of attorney continues to operate if you lose capacity, which is the one that matters for planning ahead. The word enduring is the key, because an ordinary power of attorney ends exactly when you would most need it.

An enduring power of attorney must be signed and witnessed correctly, and the attorney must accept the appointment. If it will be used to deal with real estate, it generally needs to be registered. Choose your attorney carefully, because you are trusting them with your money.

Enduring guardianship: your health and lifestyle

An enduring guardian is different. They make decisions about your health, medical treatment, and lifestyle if you lose capacity, such as where you live and what care or treatment you receive. A power of attorney cannot make these personal decisions, which is why you need both.

You can set out the areas your enduring guardian can decide, and give them directions or guidance about your wishes. This is also where your views on medical treatment and care can be recorded, so the people who matter are not left guessing at a difficult time.

The difference in one line

A simple way to hold the difference. Your attorney looks after your money and property. Your enduring guardian looks after you, your health and your lifestyle. Most people appoint both, often the same trusted person or people, so every kind of decision is covered.

When they start and stop

A general power of attorney stops if you lose capacity. An enduring power of attorney and an enduring guardianship are designed to operate when you have lost capacity, and they end on your death, at which point your will and your executor take over. The documents are meant to work as a set, covering you across capacity, incapacity, and death.

How we help

We prepare powers of attorney and enduring guardianship appointments as part of a complete estate plan, alongside your will. We make sure they are valid, that the right people are appointed with the right authority, and that they actually fit together. Doing these at the same time as your will is efficient and gives you a plan that covers every situation, not just death.

Frequently asked questions

What is the difference between a power of attorney and an enduring guardian? A power of attorney deals with your financial and legal affairs. An enduring guardian deals with your health, medical and lifestyle decisions.

What is the difference between a general and an enduring power of attorney? A general power of attorney stops if you lose capacity. An enduring power of attorney continues after you lose capacity, which is the point of planning ahead.

Do I need both a power of attorney and an enduring guardian? Most people do, because one covers money and property and the other covers health and lifestyle. Neither can do the other's job.

When does a power of attorney end? A general power of attorney ends if you lose capacity. An enduring power of attorney ends on your death, when your will takes over.

Keep reading

• Wills and estates
• How to make a valid will in NSW
• What is probate and how do you apply in NSW?

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.