Powers of Attorney and Family Wealth
What You Need to Know?
Planning for the Future
Estate planning is not just about making a will or setting up a trust. A Power of Attorney (POA) is a vital tool that ensures someone you trust can manage your financial and legal affairs if you become unable to do so. Whether through illness, an accident, or simply being away from home at a critical time, a POA can provide peace of mind for you and your family.
This article explains the different types of POAs, how they work, who to appoint, and practical issues to consider, particularly for those with family wealth or international assets.
What Is a Power of Attorney?
A Power of Attorney is a legal document executed by a person (the Grantor or Donor) that authorises another person (the Attorney) to act on their behalf.
There are two key types:
General or Ordinary POA – Allows the Attorney to perform almost any legal or financial act the Grantor could lawfully do.
Limited POA – Restricts the Attorney to a specific task, transaction or period of time.
A POA remains valid only while the Grantor is alive and mentally capable (compos mentis). If you wish the power to continue after mental incapacity, an Enduring Power of Attorney (EPA) is required. Once a Grantor becomes mentally impaired, the Attorney must register the EPA with the Court for it to remain effective.
When Is a POA Useful?
Powers of Attorney are used in a variety of situations, for example:
When travelling or working away during a property sale or purchase.
By elderly people moving into care, so someone can manage their home, investments and bills.
In commercial or banking arrangements, allowing a lender to sell a property if a borrower defaults.
A POA is particularly valuable in family wealth management, ensuring continuity in financial decision-making.
Appointing Attorneys
Choosing the right Attorney is critical. A Grantor may appoint:
Relatives or friends
Advocates or solicitors
Accountants or other licensed professionals
Where more than one Attorney is appointed, the POA should state how they will act:
Jointly – All Attorneys must act together. If one dies or resigns, the POA ends.
Jointly and Severally – Any Attorney can act independently and the POA continues if one dies or resigns.
Many prefer a joint power to reduce family disputes and provide additional oversight.
Points to Consider
Appointing only one child as Attorney may cause offence within the family.
There is a risk of abuse of power if a relative or friend is appointed. Legal recourse exists but can be limited if the estate is modest.
Professional Attorneys usually have indemnity insurance and are familiar with regulatory obligations, which provides additional protection.
Practical Issues and Common Challenges
When creating a POA, be aware of the following:
Banking requirements – Financial institutions often require an original or certified copy and may reject POAs older than six months.
Overseas use – Managing assets abroad may require a certified translation or notarisation, which can be expensive and time-consuming.
Institutional policies – Some banks insist on their own wording or forms, and internal legal departments may need to approve the document.
Before drafting a POA, it is wise to check specific requirements with key institutions and to keep the original with your advocate so certified copies can be provided when needed.
POA and Trusts – Working Together
While a POA is extremely useful, it is not a one-size-fits-all solution.
For substantial estates or complex family wealth, trust structures often provide better long-term control and asset protection. A POA can then focus on day-to-day matters such as bill payments and operating personal bank accounts, while a trust secures the more valuable elements of the estate.
Key Takeaways
A Power of Attorney is essential for effective estate and wealth planning.
Decide early between a general POA and an enduring POA if mental incapacity is a concern.
Choose your Attorney carefully and understand the implications of joint or joint-and-several powers.
Seek professional advice to ensure the document meets the requirements of banks, regulators and any overseas jurisdictions.
By planning ahead with the right combination of POAs and trusts, families can protect their wealth, reduce stress and ensure that decisions are made by those they trust.
For more information or tailored advice on Power of Attorneys, contact us