Why Powers of Attorney are Vital in Estate Planning

Estate planning is about more than drafting a will. It ensures your affairs are managed if you become unable to do so. A power of attorney (POA) allows a trusted person to make legal and financial decisions on your behalf, safeguarding your interests if you are incapacitated.

Understanding the importance of a POA can provide peace of mind and protect your assets. At Szabo & Associates Solicitors, our NSW power of attorney solicitors can explain why a POA is vital to your estate planning and how it works. We can help you create the appropriate POA for your estate planning needs.

Types of Powers of Attorney in New South Wales

A power of attorney is a legal document that grants authority to another person, known as an attorney-in-fact, to act on your behalf. This can include making decisions about your healthcare, managing your finances, and handling property matters. In NSW, there are two primary types of POAs:

• General POA: This POA is typically used for a specific period or purpose. It grants the attorney authority to manage your financial affairs, but it is only valid when you can make decisions. If you become incapacitated, a general POA becomes invalid.
• Enduring POA: Unlike a general POA, an enduring POA remains in effect even if you lose the mental capacity to make decisions. This type is crucial for long-term estate planning, as it ensures that your financial affairs are managed if you can no longer handle them yourself.

Why POAs are Vital in Estate Planning

Powers of attorney are crucial in estate planning for the following reasons:

Protection During Incapacity

One of the primary reasons to include a POA in your estate plan is to protect your financial and legal interests if you are incapacitated. Incapacity can occur unexpectedly due to illness, an accident, or advanced age. Without a POA, your family may need to apply for a court-appointed guardian or financial manager to handle your affairs, which can be time-consuming and costly. An enduring POA ensures that someone you trust has the authority to manage your assets, pay bills, and make financial decisions in your best interest without unnecessary delays.

Control Over Who Manages Your Affairs

By appointing a POA, you can control who will manage your affairs if you cannot. You can choose someone you trust to act in your best interest, whether a family member, close friend, or professional adviser. Without a POA, there is no guarantee that the person managing your affairs will align with your preferences.

Avoiding Legal Complications

Failing to have a POA in place can lead to legal complications. Without a valid POA, your loved ones may need to apply to the NSW Civil and Administrative Tribunal (NCAT) for permission to manage your financial matters. This can be a lengthy and stressful process, especially during times of emotional difficulty. An enduring POA can prevent this legal uncertainty and ensure that your financial matters are handled seamlessly.

Ensuring Continuity in Business and Property Management

If you own a business or have significant property investments, appointing a POA is even more crucial. Your attorney can manage your business or property interests, ensuring that operations continue smoothly in your absence. This can help prevent financial losses and protect your investments.

Contact Szabo & Associates Today

By creating a power of attorney, you can take proactive steps to safeguard your interests and ensure that your affairs are well-managed in the event of incapacity or absence. Consulting with our experienced NSW estate planning attorneys can help you create a comprehensive and tailored power of attorney that meets your specific needs. Contact us today to schedule a consultation.