In Elie Wiesel’s ‘Memoir: All Rivers Run to the Sea’, he expressed his view that, “ultimately, the only power to which man should aspire is that which he exercises over himself”. The manifest truth of such sentiment is belied by the nature and conduct of the vast majority of humankind. We spend far more energy exercising power over others, than we do controlling ourselves.
Which brings us to the peculiar device known as a ‘Power of Attorney’. This instrument enables a person to assign to another the authority to act on their behalf in legal, financial or medical matters during their lifetime. At first glance, one might think that anyone who would grant such overarching powers to another person might need serious therapy. After all, open the Sydney Morning Herald of 19 February 2016, and you would have read about a “Wollongong man who used power of attorney to fleece his father out of more than $157,000 in life savings”. Or see the report in the Gold Coast Bulletin of 2 September 2016 about a man who “gambled away $70,000 of his elderly mother’s life savings” after having been granted power of attorney over her finances.
There is, of course, a second side to this coin. For whilst the above reports demonstrate the terrible effects of abuse of power by those who have been granted power of attorney, it goes without saying that the vast majority of cases where a power of attorney has been granted are uneventful and, consequently, not newsworthy.
Managed carefully and incorporating appropriate limitations in terms of both scope and duration, the making of a power of attorney can actually be a very beneficial act. The standard version is a general power of attorney, which is normally temporary in nature and can be revoked at any time. It may be a useful tool for enabling the management of your affairs when you are, for example, travelling overseas or otherwise occupied. Alternatively, a power of attorney can be made that is expressed to have effect even after the person has lost capacity to self-manage. This is known as an enduring power of attorney, and can take effect immediately upon be executed or, alternatively, only if and when the person loses the capacity to manage their own affairs, such as by developing an illness that impairs their ability to make independent decisions.
There are a number of ways to minimise the risk of exploitation when granting a power of attorney. Most important is to ensure that the terms of the power are clearly delineated and in accordance with your wishes. Further, appointing multiple attorneys to act jointly, such that no single attorney can act without the agreement of the other attorney(s), is a very useful safeguard against misuse.
As with most things in life, there are risks and benefits associated with a power of attorney. Contact our wills specialist to ensure your interests are protected.