Enduring Power of Attorney Vs Enduring Power of Guardianship
When clients attend an appointment to make a Will, their lawyer should always discuss the various Estate planning tools designed to protect their assets and ensure their financial and legal affairs are in order.
The most common tools used to complement a Will include an Enduring Power of Attorney and an Enduring Guardianship appointment, as noted in our previous article “Your Estate Planning Tool Kit”. When discussing these options, one of the most common questions we are asked by clients is “What is the difference between the two?”
An Enduring Power of Attorney and Enduring Guardianship are both legal documents that empower a person (or multiple people) to make decisions on your behalf if you are unable to do so yourself. However, the key difference between the documents is that an Enduring Power of Attorney relates to financial and/or property decisions, whereas an Enduring Guardianship appointment relates to lifestyle, health, medical and other personal decisions.
What does Enduring Mean?
The term ‘enduring’, when it comes to Enduring Powers of Attorney and Appointments of Enduring Guardians, relates to the notion of mental capacity.
A General Power of Attorney gives someone the right to act on your behalf in financial matters if you are are unable to manage those financial matters yourself. It may be useful for example to have someone to go to the bank for you if you if you are sick or too frail to visit yourself, or even to sign documents on your behalf if you are overseas or in hospital for an extended period.
However, a General Power of Attorney can no longer be used if a person is unable to make decisions or act on their own from a mental capacity viewpoint. This is where an Enduring Power of Attorney comes in. An Enduring Power of Attorney can continue to be used when a person has lost capacity.
Capacity is also intrinsic to the operation of an Appointment of Enduring Guardian. An Enduring Guardianship appointment comes into effect only once the person is ‘in need of a guardian’ Section 6A of the Guardianship Act 1987 (NSW) (the Act)). A person in need of a guardian is a person who is ‘totally or partially incapable of managing his or her person’ (section 3 of the Act).
When to make an Enduring Power of Attorney or Enduring Guardianship Appointment
An Enduring Power of Attorney or Enduring Guardianship appointment must be made before a person loses capacity.
The timing is critical and is designed to ensure that people are not taken advantage of after they have lost capacity and cannot be coerced into handing over decision-making powers concerning their finances, health or welfare.
More Information
For more information on the estate planning process, including the appointment of an Enduring Power of Attorney or Enduring Guardian, contact a member of the Wills and Estates team at Colin Daley Quinn on Ph: 02 8556 0130.
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