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New legislation has been passed in NSW dealing with powers of attorney. Here is a review of the new law.


A power of attorney is a document, which appoints a person to act on your behalf in relation to your property and financial affairs. If an attorney is appointed, this does not mean that you have given away you own right to make decisions. You can continue to make your own financial decisions and deal with your assets. The attorney can also deal with your assets. In light of the importance of the role it is vital that you choose someone you trust as your attorney.


Ordinary Power of Attorney
An ordinary power of attorney will be automatically revoked if the principal (the person giving the power) loses their mental capacity to act for themselves.
Enduring Power of Attorney
An enduring power of attorney continues in force if the principal loses their mental capacity to act for themselves.
Revocation of Both Types
Both types of powers of attorney can be revoked by the principal at any time provided they have the mental capacity to do so.
Both types of powers are automatically revoked on the death of the principal.

For an enduring power of attorney, a solicitor must certify that they explained the effect of the enduring power of attorney to the principal before he or she signed it, and that the principal appeared to understand the effect of the enduring power of attorney.

Sections 11, 12 and 13 of the new Act clarify the law about the attorney giving gifts and benefits to themselves and others from the funds of the principal. They make it clear that the power of attorney does not authorise the attorney to use the principal’s funds to give gifts or benefits to themselves or third parties, unless the principal expressly authorises the attorney to do so.

The main advantage of this change is that it removes current uncertainty. This reform also recognises that attorneys and third parties can be dependant on the principal.

Where the principal gives power to their spouse it is important that the document state that the attorney / spouse can benefit themselves. This allows the attorney/spouse to then use the principal’s money in payment of family expenses. Where there are dependant children they should be listed in the document also so that the principal’s money can be made available by the attorney in order to benefit those children.

As can be seen, the reform gives the principal the opportunity to consider what he or she really wants to do and then to empower the attorney accordingly. Appropriate advise will be required, and specific instructions given to ensure that when the power is activated (ordinary or enduring), the attorney will have a clear understanding of the extent of the power.

The prescribed new form of power of attorney gives the principal an “options list”. The power can operate:
§          immediately;
§          when the attorney accepts the appointment;
§          between certain specified dates;
§          when your attorney considers that you need assistance managing your affairs; or
§          at another time of your choice

The choice is, of course, for the principal to make, and advise will be required before this choice is made.

An enduring power of attorney will now not operate to confer any authority on an attorney until the attorney has accepted the appointment by signing the power of attorney document itself. The acceptance does not need to be witnessed. Such acceptance can be at the same time as the principal signs it, or at any time after. If more than one attorney is appointed, authority to act is only conferred on that attorney or those attorneys who have accepted the appointment.

If the attorney does not clearly make their views known by selecting an option or by failing to select clear or consistent options, an ordinary power operates immediately and an enduring power operates when the attorney accepts.

A power of attorney is as important as your Will. If you have any material assets you need a power of attorney to establish who will look after those assets if you are not physically or mentally able to do so.

The reforms clarify the obligations on those authorised to assist a principal to make an enduring power of attorney and on those appointed as attorneys. With proper advice and due consideration of the variety of options, both principals and attorneys will be able to better plan for and manage an important aspect of life.

Prepared by:
Peter Townsend                BS, LLB, FAICD
Peter Townsend Business Lawyers
The Clarence Street Professional Group
Level 3
222 Clarence Street

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.


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