WILL VERSUS ENDURING POWER OF ATTORNEY
WHAT IS THE DIFFERENCE?
WHY DO WE NEED THEM
1. Confusion between a Will and an Enduring Power of Attorney
There appears to be a common mistake about the roles of a Will and an Enduring Power of Attorney for the lay person. A will is a document prepared by a testator (male person making a will ) or a testatrix (female person making a will). A will is a formal document that provides instructions on how to distribute the estate of a person after death. It provides and requires the following:-
- Full name of person making a will, address, and occupation if any
-Full name of trustees or executors of the will of a person making the will.
(when someone dies, an executor is the person appointed by the will to administer the estate. What this means really is that the executor makes sure that the debts of the deceased are paid and their assets or possessions go where the deceased wanted them to go. A testator/testatrix can name more than one executors if so desired.
If the deceased has infant children, the executor or trustee so named is usually appointed as guardian of the deceased’s infant children.
Usually the will would name the beneficiaries of the estate, and how the assets are to be distributed. It could be specifically named, like “half” or 50%, or as “tenants in common in equal shares.”
There is a class of beneficiaries generally accepted by Australian courts – the spouse/partner and the children of the deceased.
2. Power of Attorney/Enduring Power of Attorney
A power of attorney is a formal document giving another person the authority to make legally binding decisions on your behalf.A power of attorney is a formal document giving another person the authority to make legally binding decisions on your behalf.
There are two types of power of attorney: general power of attorney and enduring power of attorney.
General power of attorney
You would use a general power of attorney to appoint someone to make financial decisions on your behalf for a specific period or event, such as if you’re going overseas and need someone to sell your house or pay your bills. It’s used while you can still make your own decisions and ends once you no longer can (i.e. you lose capacity).
Enduring power of attorney
You would use an enduring power of attorney to appoint someone to make financial and personal decisions on your behalf if you become unable to make your own decisions, e.g. if you have failing cognitive health or lose capacity to make decisions.
The Public Guardian can be appointed to make decisions on your behalf under an enduring power of attorney.
Put it simply, you use a general power of attorney if you want someone to make a financial decision for a discrete period of time; you use an enduring power of attorney if you wish to have someone act on your behalf if you become mentally or psychologically incompetent.
You use a Power of Attorney/Enduring Power of Attorney while you, the grantor, are still alive. The Will takes over when the person dies; i.e. the Power of Attorney or Enduring Power of Attorney is used while the grantor (the person giving the power of attorney to a third party), is still alive. The Will applies when the testator/testatrix is deceased.
The Power of Attorney and the Enduring Power of Attorney are both registrable at the Land Property Administration (formerly known as the Land Titles Office); the Will is not.
3. Should you have one and not the other?
It is advisable to have both the Will and the Enduring Power of Attorney done. The Enduring Power of Attorney and the Will must be made while the person is still mentally competent. When a person becomes mentally or otherwise incompetent, the courts will not accept the document signed by the person (who is mentally incompetent or psychologically unsound).