" Power of Attorney " Risks !

We Australians are living longer - and becoming richer.   The family home which once brought a humble price has escalated in value to the extent that in a favourable suburb it is now worth millions. Many people have assets that were once only a dream.

Unfortunately,  living to extreme old age brings with it the problem of senility.   We reach the stage where comprehension fails and we have trouble managing our affairs.   Often this is the forerunner of the onset of Alzheimer's disease.  Many people choose to sign what is known as a "Power of Attorney " to allow someone else to act on their behalf.

That is a decision which needs to be made with great caution.  It confers the right for the chosen person to spend money or deal with assets entirely at their own discretion.  If a persons money is squandered recklessly there is no recourse through the courts to seek recovery.

There have been cases where that Power of Attorney has been  granted to a close friend or family member, and it is later found that the entire fortune was poured through the poker machines.  Even a trusted person may have a hidden gambling inclination.   There is also fear that with increasing senility, squabbling family members are taking advantage of older people and using Power of Attorney to distribute assets to their own advantage.

This is raising the question of access to delivering that power to another person.  The pro-forma of both wills and Power of Attorney are readily available at any newsagent and only need the details to be filled in.  For either to be legal, they must be signed in the presence of two witnesses who together observe that signing.  A beneficiary to a will may not be a witness.

The government is considering tightening the conditions that apply to the granting of a Power of Attorney.   One aspect would be a requirement that such an instrument would need to be drawn up by a registered member of the legal profession.   That would ensure that the person granting the Power of Attorney would be carefully briefed on the risk factor and the member of the legal profession would ensure that the person granting that power was mentally competent to make that decision.It does introduce a new cost factor to the process.

There is a danger that without such control the elderly may be browbeaten by family members into granting power of attorney or be manipulated into signing at a time when their mental health has deteriorated beyond the ability to make a legal decision.

Despite the risk factor, a power of attorney is a valid means of safeguarding personal or family assets in the event of a disaster.   It is common for couples to have mutual power of attorney documents lodged with their solicitor for implementation should either become incapacitated.

Should one partner experience a severe accident or contract a debilitating disease their personal affairs go into limbo once they are unable to legally give direction.   That power of attorney enables the surviving partner to legally make decisions as if that person was not debilitated.

Powers of Attorney are important instruments of estate management.    It is just a matter of very carefully selecting the recipient !