What is "power of attorney"?

Power of attorney is an authority by which one person (the "donor") gives authority to someone else (the "attorney") to act in their name.

Why use it?

The idea of someone else being able to sign your cheques, cancel your insurances, even sell your home, would be a nightmare in most circumstances. But if your health deteriorates or you go overseas and are unable to run your own affairs, having someone else to help can be a godsend.

Many people think their partner will be able to step in automatically but that isn't the case. Even if you've been married 50 years, your spouse will not be able to deal with any accounts, policies or possessions if they are in your own name. They'd need to go to court to be given that power. This could take months and cost thousands of dollars.

The best option is to arrange power of attorney in advance. It must be made while the donor's mental capacity and judgment still allow them to understand what they are doing.

Types of power

There are two broad types of powers: "ordinary" and "enduring".

Ordinary powers are best used for temporary purposes – for example if you're going overseas and want someone to be able to send you cash from your accounts or to pay bills here.

Most advisers recommend an "enduring" power of attorney for longer term protection. This works after you've become mentally incapable, while an ordinary power would lapse.

Enduring powers of attorney can relate to property or your personal care and welfare. One attorney can act in relation to both property and care and welfare.

Revoking an enduring power of attorney

You can vary, suspend or revoke an enduring power of attorney while you’re still mentally capable. There are different procedures surrounding each of these actions. Legal advice should be sought, especially in regard to revocation.

The Protection of Personal and Property Rights Act 1988 sets out requirements for enduring powers of attorney.