This article was written by Grace Blake Solicitor at W & G Lawyers.
Most people know they should have a will. Far fewer have thought about who would pay the mortgage, deal with the bank or speak to a hospital if they were suddenly unable to do so themselves. A will only operates after death. A power of attorney deals with the time before death, when you are alive but cannot, or would prefer not to, act for yourself.
This article explains in general terms how powers of attorney work in Queensland. It covers the two types of power of attorney, when your attorney’s authority may start, whether the document needs to be registered, who you can appoint, and what an attorney can and must do.
Enduring or not enduring, the difference that matters most
Queensland recognises two kinds of power of attorney.
A general power of attorney lets you (the principal) authorise one or more people (your attorneys) to act for you in financial and legal matters only. It cannot cover personal or health decisions. You need decision-making capacity to make one, and it generally continues until it is revoked, expires according to its own terms, or you lose capacity or die. Because it ends the moment capacity is lost, it is a tool of convenience rather than protection. It is typically used for a defined purpose or period, such as signing settlement documents while you are overseas.
An enduring power of attorney differs in two ways. First, it endures, in that it is not revoked if you lose capacity. Second, it may cover personal matters, including health matters, as well as financial matters. It is the document that allows someone to step in when you can no longer make your own decisions, whether through dementia, a stroke or a serious injury. In practice, before your attorney can act on that basis, the bank, hospital or other organisation involved will usually want written confirmation from a doctor that you have lost capacity.
Because it does so much more, the law surrounds it with more safeguards. It must be in the approved form, you must understand its nature and effect, and it must be witnessed by a justice of the peace, commissioner for declarations, notary public or lawyer. Your witness cannot be one of your attorneys, a relative of yours or of an attorney, or your paid carer or health provider. The witness must certify that you appeared to have capacity, and each attorney must sign to accept the appointment. An attorney who has not signed has no power.
Both kinds of power of attorney end on your death. From that point your executor takes over under your will.
When does your attorney’s power start
Under a general power of attorney, the power is generally exercisable as soon as the document is made, unless the document says otherwise.
Under an enduring power of attorney, it depends on the kind of matter. For personal and health matters, your attorney can only act while you have impaired capacity. For as long as you can make your own decisions about where you live and what treatment you receive, your attorney cannot make them for you. For financial matters, you choose. The document may say the power begins immediately, on a particular date or occasion, or only when you lose capacity. If you do not specify, the power will generally begin as soon as the document is made.
One point is often missed. If you nominate a future date or event and you lose capacity before it arrives, your attorney may still be able to act for financial matters during the period of incapacity. Choosing a later start date is therefore unlikely to leave you unprotected in the meantime.
Which starting point suits you depends on your own circumstances. An immediate start means your attorney can act straight away, without anyone needing to establish that you have lost capacity. A start on loss of capacity means the bank or other organisation will usually ask for evidence of your incapacity first. Neither option is inherently better, and advice is recommended before you decide.
Registering with Titles Queensland
Registration is not required for a power of attorney to be valid, but it is generally required before your attorney can deal with land.
An instrument signed by your attorney, such as a transfer, mortgage or lease of Queensland land, cannot usually be registered unless the power of attorney has first been registered. This is done by lodging the original document or a certified copy with a short request form, and a fee applies. Only a document giving power for financial matters can be registered.
There is usually no need to register when the document is signed. Registration can be attended to later, including by your attorney after you have lost capacity, when a sale or refinance is actually on foot. Some clients prefer to register early so that a future sale is not delayed. That is a reasonable choice, and it carries one consequence worth understanding. A registered power of attorney may continue to appear to authorise your attorney to deal with land until the revocation is also registered, so if you later revoke the document it is important to lodge the revocation with Titles Queensland as well.
Who you can appoint
Your attorney must be at least 18 and have capacity. They must not be your paid carer now or within the past three years, your health provider, or the operator of a residential service where you live, such as a boarding house or supported accommodation. A family member receiving a Centrelink carer payment is generally not a paid carer for this purpose. For financial matters, they must not be bankrupt or taking advantage of the laws of bankruptcy. The Public Trustee or a trustee company can also be appointed for financial matters.
Eligibility is not tested only at signing. The appointment may be revoked, to the relevant extent, if an attorney later loses capacity or dies. It may also be revoked if an attorney becomes bankrupt, for financial matters, or becomes your paid carer or health provider, for personal matters. If you later marry, the document is generally revoked to the extent it appoints anyone other than your new spouse, unless it says otherwise. Divorce generally revokes the appointment of a former spouse.
You may appoint one attorney or several, different attorneys for different matters, and successive attorneys who take over when an earlier attorney’s power ends. Multiple attorneys may act jointly (all must agree), severally (any one may act) or jointly and severally. If the document is silent, they must generally act jointly. In practice, what matters most is whether the person is trustworthy, good with money and paperwork, willing and available, and whether appointing several adult children jointly is likely to produce cooperation or deadlock.
What your attorney can do
For financial matters, your attorney may generally do anything you could lawfully do through an agent. This includes operating bank accounts, paying bills, managing investments, buying, selling or mortgaging property, running a business and lodging tax returns. Unless the document limits it, your attorney has full power over the matter. You may restrict that power, exclude particular assets, or give binding instructions.
For personal matters, your attorney may decide where and with whom you live, consent to or refuse health care, and deal with day-to-day matters. If you have made an advance health directive, its directions generally prevail for health decisions.
There are things no attorney can do. Some decisions are reserved to you alone, including making or revoking a will or an enduring power of attorney, consenting to your marriage or to entering or ending a civil partnership, consenting to the adoption of a child, and voting.
Special health matters, such as tissue donation, are outside your attorney’s power altogether. You may give directions about these yourself in an advance health directive while you still have capacity. If you have not, consent can generally only be given by the Queensland Civil and Administrative Tribunal (QCAT).
Your attorney may only give gifts of the kind you gave, or would have been expected to give, when you had capacity, and of reasonable value, such as customary birthday gifts or regular donations. Your attorney must also avoid a “conflict transaction”, being a transaction in which their own interests, or those of their relatives, friends or business associates, may conflict with yours. Selling your property to themselves or lending your money to their child would generally be conflict transactions unless the document, you, the court or QCAT authorises them.
One further consequence is worth knowing. If your attorney sells an asset that your will specifically leaves to someone, that gift may simply fail, and the beneficiary may receive nothing in its place. Queensland law allows a person who has lost a benefit in this way to apply to the court after your death for compensation out of your estate, and any order is at the court’s discretion rather than automatic. If a particular asset is important to a particular beneficiary, it is worth raising that when your power of attorney and your will are prepared.
What your attorney must do
An appointment as attorney is a position of trust, and the law imposes duties to match. Your attorney must:
- act honestly and with reasonable diligence to protect your interests, and comply with the terms of the document
- follow the general principles, which include presuming you have capacity, supporting you to make your own decisions, taking into account your views, wishes and preferences, and acting in the way that is least restrictive of your rights
- keep accurate records of all dealings under the power, and keep your property strictly separate from their own, unless it is jointly owned
- avoid conflict transactions and observe the limits on gifts
- consult with any other attorneys or appointees and, where appointed jointly, act together
- keep your information confidential
- stop acting once the power is revoked or ends
The consequences of getting this wrong can be significant. An attorney who fails to comply with these obligations may be ordered to compensate you, or your estate, for any loss. A transaction between you and your attorney is also presumed to have been induced by undue influence, which may make it easier to challenge. QCAT may remove an attorney and appoint an administrator or guardian instead, the Public Guardian may investigate complaints of neglect or exploitation, and dishonest conduct may attract criminal liability.
What if there is no enduring power of attorney
If you lose capacity without an enduring power of attorney, no one, not even your spouse, automatically has authority over your finances. Someone would have to apply to QCAT for the appointment of an administrator and, if needed, a guardian. That process takes time, and QCAT is not bound to appoint the person who applies. It may appoint the Public Trustee or Public Guardian instead, particularly where family members disagree or no suitable person is available. For health care decisions only, the law recognises a “statutory health attorney”, usually a spouse, unpaid carer or close relative, who can act. That authority does not extend to your money or property, or to decisions about where you live.
How W & G Lawyers can help
At W & G Lawyers, estate planning is a core part of our practice. We can assist you to:
- prepare an enduring power of attorney or a general power of attorney tailored to your circumstances
- decide when your attorney’s financial power should begin, and who should hold it
- prepare an advance health directive alongside your enduring power of attorney
- review or revoke an existing power of attorney, and attend to registration or revocation with Titles Queensland
- advise attorneys on their duties, record keeping and conflict transactions
- apply to QCAT for the appointment of an administrator or guardian, or respond to concerns about an attorney’s conduct
- prepare or update your will as part of a complete estate plan
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Disclaimer
This article is general information only and does not constitute legal advice under Australian law. For advice specific to your situation, please contact W & G Lawyers. For further details, please click here to view our disclaimer.