Though commonly used and highly important, there are many misunderstandings and misconceptions regarding Powers of Attorney.
In this article we go through some of the common beliefs regarding these documents.
Each of the headings below provides a common misconception about Powers of Attorney.
1. “An Attorney can do whatever they like under a Power of Attorney”
While the exact powers given under a Power of Attorney will be customised to suit each individual, an Attorney never has the power to (amongst other things):
- make, revoke or amend the Power of Attorney of a Principal (the person giving the Power of Attorney)
- vote on behalf of a Principal in an election or referendum
- consent to the adoption of the Principal’s child
- consent to the marriage of a Principal
- take any action contrary to the Principal’s Power of Attorney
For more details on the rights, responsibilities and scope of acting as an Attorney, see our article here.
2. “If I make a Power of Attorney I can no longer do things myself”
The granting of a Power of Attorney does not cause the person making it to lose the power to do anything they can otherwise legally do.
3. “My personal Power of Attorney will cover my company too”
A Power of Attorney given by a director of a company does not authorise the Attorney to sign on behalf of a company, even in the case of a sole director company. The company must itself give a Power of Attorney. See this article for further information.
4. “My Attorney can change my Will”
An Attorney cannot make, revoke or amend the Will of the Principal, though in dealing with the Principal’s assets, an Attorney may affect or undermine the Principal’s estate plan.
5. “A valid Power of Attorney has to be accepted by third parties”
Institutions, such as banks, will reserve the right to reject a Power of Attorney if they are in any way uncomfortable or suspicious about the Attorney’s proposed exercise of the authority granted.
A Power of Attorney is simply evidence of the authority an Attorney has to deal with the affairs of the Principal. A third party is not required to deal with the Attorney, nor is the third party liable to the Principal, if the third party decides not to accept or recognise the authority of the Attorney.
6. “A Power of Attorney continues after death”
A Power of Attorney does not continue to be effective after death. Death revokes even an Enduring Power of Attorney. The person who will then deal with the deceased’s estate is their executor, appointed under their Will.
7. “My attorney can sign a mortgage on my behalf”
A Power of Attorney does not always allow an Attorney to sign a mortgage on behalf of the Principal. Lenders will often not accept the execution of mortgages by an Attorney on behalf of the Principal.
8. “Anyone can be appointed as an Attorney”
A Principal cannot appoint as an Attorney:
- A corporation (under an Enduring Power of Attorney), apart from a trustee company
- A person under 18 years of age
- A person who is bankrupt
And as a bonus…
9. “I’m too young for a Power of Attorney”
It is essential that everyone over the age of 18 have a Power of Attorney! (See our article here on why you should make a Power of Attorney).