We all should have a Power of Attorney â€" Have you?
I was asked today," Can a power of attorney see the financial statements?" Like most replies to these questions I answered, it depends.
Firstly, what is a 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, sell your property, read your business financial statements would be a severe breach of your privacy and independence. However, if your health deteriorates or you go overseas and are unable to run your own affairs, having someone else to help who you trust is the best option.
Many people think their partner will be able to step in automatically but that is not the case. Even if you have been married 30 years, your spouse will not be able to deal with any accounts, policies or possessions if they are in your own name. They would 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 a power of attorney in advance. This needs to be done while the donor's mental capacity and judgment still allows 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 â€" 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 have 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 are still mentally capable.
Being a Power of Attorney.
You must act in the best interests of the donor. You must keep records of each financial transaction entered into under the enduring power of attorney while they are mentally incapable.
Therefore, to answer the question - if the Power of Attorney in relation to property has been activated, then it is important that the power of Attorney can see the financial statements. The power of attorney has a duty to ensure they have all the information needed to base decisions in the best interest of the donor.
Coombe Smith (PN) Limited