Powers of Attorney: the legal tool every estate plan needs

When most people think about estate planning, they focus on their will. While a will is vital, it only becomes effective after you pass away. A power of attorney, however, protects you during your lifetime. It ensures that if something prevents you from making decisions for yourself, someone you trust can step in and act according to your wishes. For many families, this document becomes just as important as the will itself, yet it is often one of the most overlooked elements of an estate plan.

Taking the time to prepare a power of attorney is not about expecting the worst. It is about giving yourself and your loved ones clarity and confidence if the unexpected occurs. No matter your age or stage of life, having the right structures in place can make an enormous difference.

Understanding the different types of Powers of Attorney

A Power of Attorney is a legal document that authorises someone else to make decisions on your behalf. Different forms exist to cover different needs. Understanding how they work helps you choose the right protections.

General Power of Attorney

A General Power of Attorney allows someone to manage your financial and legal affairs but only while you still have capacity. It is often used for a specific purpose such as bidding at an auction while you are interstate, or if you need help managing your business or financial commitments while you are away overseas. If you lose capacity, this authority automatically ends.

Enduring Power of Attorney

An Enduring Power of Attorney continues even if you are no longer able to make decisions independently (it ‘endures’ through the incapacity). This makes it essential for long-term planning as people live longer, often with more complex personal and financial needs. The appointed person can manage tasks such as banking, investments, property transactions, where you live and how you are cared for.

Medical Power of Attorney or Appointment of Enduring Guardian

This document gives someone authority to make medical decisions on your behalf if you cannot communicate your wishes. Depending on your state or territory, it may have different names, but the intent is similar. It covers decisions such as consent to treatment, surgical procedures, living arrangements and general care preferences. It ensures someone who understands your values can advocate for you.

In Victoria the document can be uploaded to VicHealth by your doctor so it is available to hospitals in the event of an emergency.

Choosing the right person to act on your behalf

Selecting an attorney is one of the most important decisions in the entire estate planning process. You are placing significant trust in the person or people you appoint so careful consideration is key.

It is important to choose someone who is reliable, capable and comfortable making decisions under pressure. For financial and legal matters, they should be confident handling money and understanding the implications of complex decisions. For medical or lifestyle decisions, they should have a clear understanding of your personal values and what matters most to you.

You can appoint more than one attorney, specify whether they must act together or independently, and designate if they are appointed for all powers or not (example, attorney A for financial and attorney B for personal matters). This can provide balance and oversight, but it also requires clear instructions to avoid disagreement. Open conversations with your preferred decision-makers before finalising documents can help ensure everyone understands your expectations.

Responsibilities and reducing potential risks

Acting as an attorney carries significant legal responsibility. An attorney must always act in your best interests, manage conflicts appropriately, keep accurate records and operate within the limits of the authority you have provided. This duty exists to protect you but it also means the role should only be given to someone prepared to take on the full responsibility.

While most attorneys act with integrity, there is potential for misuse, particularly where financial vulnerability or diminished capacity is involved. Clear documentation, good communication and proper legal guidance can significantly reduce risks. Ensuring the documents are drafted and executed correctly is also essential, as formal requirements vary between states and territories.

How Powers of Attorney fit into your broader estate plan

A complete estate plan brings several elements together: your will, superannuation nominations, beneficiary structures and your Powers of Attorney. Each plays a role at different times but they need to work cohesively.

Powers of Attorney operate while you are alive, often during periods of vulnerability. Your Will takes effect afterwards. Ensuring that these documents align helps your family and advisers manage your affairs smoothly, reducing the potential for confusion or conflict.

Regular reviews are important. Major life events – such as marriage or divorce, a change in health, moving interstate or changes in family circumstances – may require updates. Your financial adviser can help coordinate this process and work with legal professionals to ensure your documents continue to reflect your goals.

Preparation creates confidence

Establishing Powers of Attorney ensures that your financial, personal and medical affairs will be managed in line with your wishes, even if you cannot advocate for yourself. It also alleviates stress and uncertainty for the people closest to you.

When an unforeseen event occurs and there are no documents in place, the stress on a family on seeking a Tribunal appoint someone for the affairs, is immeasurable.

Speaking with your adviser can help you understand your options and ensure your estate plan is clear, complete and built around your goals. Taking this step today will give you and your family greater peace of mind for the future.

General Advice Warning

The information provided in this blog does not constitute financial product advice or a recommendation to purchase a particular product. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners Pty Ltd is not a registered Tax Agent. You should consider your individual situation and seek tax advice from a registered tax agent before making any decision based on the content of this document. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.