Although not on the top of everyone's priority list, it's important to plan ahead when it comes to how your finances will be managed if the unexpected happens. In this article Financial Adviser Tim Hughes from Team Super Financial Advice discusses how appointing an enduring power of attorney is one of the best ways to prepare and give you peace of mind.

"An attorney appointed under an enduring power of attorney document can look after your affairs if you're unable to. This doesn't always have to be when you're unable to make decisions yourself due to health reasons. An enduring power of attorney can also be activated if you're living overseas and need someone to look after your interests in Australia. Having the right documentation in place can avoid issues and stress for your loved ones and ensures you're in control of who makes decisions on your behalf," explained Tim.

What's an enduring power of attorney?

An enduring power of attorney is a legal document where you nominate someone to manage your assets and financial affairs in the event you're unable to do so. It remains valid during your lifetime, even if you lose the ability to make your own decisions. Tim highlights that it shouldn't be confused with a general power of attorney which becomes invalid if you lose the mental capacity to make your own decisions. Both a general and enduring power of attorney become invalid upon death. You can revoke a power of attorney at any time, as long as you understand the implications.

Depending on the wording of the document, an enduring power of attorney may be activated in certain situations, such as when you're travelling for a long period or living overseas, or if you lose the ability to make your own decisions due to an illness or accident. "In most states and territories, an enduring power of attorney is limited to financial and legal decisions, such as paying medical and household bills. You may also want to consider appointing a guardian and having a medical care plan in place outlining your medical wishes if you’re unable to make these decisions yourself,” explained Tim.

Who you can nominate

You can nominate one or more people as your enduring power of attorney, such as your spouse, relative, close friend or solicitor. Tim said, "You can limit how they carry out their responsibilities or place conditions on the decisions they can make. For example, you can prevent them from selling your home. It’s important you choose someone you trust and who has the skills and capabilities to manage your finances and act in your best interests."

Can an attorney manage your super?

Usually an attorney under an enduring power of attorney will be appointed to make financial decisions for you. This means that they could withdraw your super and manage your super account. However, you can put limits on the attorney’s powers to stop them from doing certain things. You should discuss this with your solicitor. If you want your attorney to be able to make or change a binding death benefit nomination, this will need to be authorised under the power of attorney document.

How to nominate an attorney

According to Tim, most states and territories have standard power of attorney forms that you can complete to appoint an attorney. "But I always advise people to seek professional legal advice before appointing someone, as it is a very important document," he added.

“It’s also important to understand that if someone has not appointed an attorney under an enduring power of attorney and they lose capacity, an attorney appointed under a general power of attorney will not be able to act for them. An application then has to be made to the relevant state tribunal to appoint someone to make decisions for them. This process can add unnecessary stress to your loved ones,” finished Tim.