Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 463

Power of attorney: six things you need to know

With advancements in medicine and constant improvements to Australia’s healthcare delivery, Australians are living longer. According to the Australian Institute of Health and Welfare, one-in-six Australians are aged 65 or over, and by 2066, it is predicted this age demographic will make up 21-23% of our total population.

As the population of older Australians increases, it is a sad reality that more Australians will lose capacity in their final years due to chronic illness and disorders such as dementia. In turn, this will mean more relatives will someday need to exercise a power of attorney and be responsible for making financial and medical decisions for a loved one that has lost capacity.

A power of attorney is created when one person (the principal) appoints and authorises another person or an organisation, such as a trustee company (the attorney), to legally act and make decisions on their behalf. In most cases, a power of attorney is given when, due to illness or disability, the principal is unable to represent and or make decisions themselves. Appointed attorneys can make decisions for the principal across a range of matters, including property, finances, and medical care.

In this article, we look at six things Australians should know about powers of attorney.

1. Know the correct terminology

I often see confusion in my own clients around distinguishing between a general power of attorney, enduring power of attorney, and an attorney. 

A general power of attorney is a legal document where the principal appoints another to act on their behalf in relation to different decisions around key assets, from property to their bank account. This can commence or be revoked at any time, and will cease effect if the principal dies or loses mental capacity to make their own decisions.

An enduring power of attorney is a legal document that sees the powers of an attorney continue, even when the principal is unable to make decisions for themselves due to accident or illness that results in loss of capacity. Typically, an enduring power of attorney will end when either the attorney or the principal dies, or the attorney loses capacity themselves.

A loved one who has been appointed in a general or enduring power of attorney document is simply known as an attorney. It is important to note that in Australia, this definition of attorney differs from the way it is used in the United States, where lawyers are referred to as attorneys.

2. A principal may appoint more than one attorney

Families should be aware that it is possible for more than one person to be appointed as an attorney, and the principal may allocate certain responsibilities to each one. For example, one child may be appointed a financial attorney, while another can be appointed a personal attorney to make healthcare decisions.

Throughout my career, I have often seen principals split responsibilities by gender; the eldest son is appointed to look after their parent’s financial affairs, whilst the daughter is entrusted with healthcare decisions. Thankfully these trends are now changing. Above all else, parents must seek to appoint attorneys who are both capable and trustworthy.

3. It is possible to appoint an alternative attorney

Life has its unpredictable moments. In my profession, it is surprisingly common to see client cases where the principal’s attorney passes away or loses capacity themselves.

These situations highlight the importance of a principal naming an alternative attorney who will take on the initial attorney’s responsibility if the initial attorney dies, loses capacity themselves, or their powers are revoked.

Alternative attorneys must act in the same manner as the initial appointed attorney unless the power of attorney document states otherwise.

4. It is not always easy to renounce power of attorney

We all know people’s circumstances change over time. So, what happens if you are somebody’s attorney but can no longer manage the responsibility?

If you have an enduring power and the principal still has mental capacity, or you have been appointed a general power, you can resign in writing at any time. If you are an enduring power and the principal has lost capacity, it becomes much more difficult. In the latter case, attorneys can only resign if the principal appointed another attorney or named an alternative attorney, and the document allows the alternative attorney to step in in those situations. If no alternatives exist, or the document does not allow an alternative attorney to step in unless the initial attorney has passed away, you will need to be granted leave by the relevant guardianship board.

For this reason, it is critical that attorneys remain well-prepared and fully understand their responsibilities while the principal still has decision-making capacity.

5. Attorneys are not remunerated

Despite the attorney undertaking key day-to-day tasks on behalf of the principal, an attorney is generally not entitled to any remuneration unless specifically authorised by the power of attorney document.

6. Always seek professional advice

The role of an attorney is important and comes with a great deal of responsibility. As such, ensuring these powers are given to the right person remains critical. Appointing the wrong attorney can leave elderly Australians vulnerable to numerous forms of elder abuse, including neglect, theft or financial abuse. It can also lead to conflict and place significant strain on family relationships. In our profession, we are increasingly having clients request an independent financial attorney instead of a family member to ensure that potential family conflicts are minimised, and the family can then focus on the healthcare and personal decision-making choices of the principal.

Planning ahead, having open family discussions and obtaining help from a legal professional or trustee services provider will ensure all arrangements being made are in the best interests of the principal. In my career as a Wills and Estates accredited specialist, I have seen the enormous difference this can make.

 

Anna Hacker is National Manager, Estate Planning at Australian Unity Trustees Limited. This article is for general information only and does not consider the circumstances of any investor.

 

  •   22 June 2022
  • 1
  •      
  •   

RELATED ARTICLES

Avoid unnecessary CGT with this estate planning clause

SMSF estate planning: Eight things to consider

10 things I learned about dementia and care homes from close range

banner

Most viewed in recent weeks

Division 296: the initial moves to make before the windows close

What if the best superannuation strategy isn't about earning more, but acting before your options disappear? Several overlooked planning windows are narrowing, with consequences that can last for decades.

The retirement scorecard: how many of these questions can you answer?

From the maths of retirement, estimating spending and picking the right asset allocation to survive a poor decade, here are the questions every retiree – current or future – should be able to answer for themselves.

Testamentary trusts: Treasury has picked the wrong reading

A decades-old estate planning tool has survived one tax crackdown only to be caught by another. The surprise isn't who the reform is targeting, but who could end up paying the price for drafting choices made years ago.

Superannuation’s structural failings

Politicians are fighting over access to super, but they may be arguing about the wrong thing. The system’s three fundamental flaws have been hiding in plain sight for decades, costing Australians far more than they realise.

Avoid unnecessary CGT with this estate planning clause

A simple estate plan can create a ticking time bomb. One overlooked clause can pit spouses against children, delay inheritances, and potentially leave a family facing an unexpected tax bill worth hundreds of thousands of dollars.

Higher yields are creating opportunities in global bonds

Bond markets are adjusting to a new reality, but not in the ways investors expect. With markets repricing and capital competing for attention, investors may need to rethink where resilience and opportunity lie. 

Latest Updates

Retirement

The retirement account that Australia should have

Our retirement system asks one account to do two very different jobs. A dedicated "rainy day" account separating income from emergency savings could deliver better outcomes and greater peace of mind for retirees.

Investing

What the US midterm results mean for investors

Democrats have regained control of Congress, changing the equation in Washington. Whether that proves positive for investors will depend less on the result itself and more on what happens next for growth and markets.

Taxation

Should the capital gains tax reward risk?

A reader query on the recent CGT reforms has revealed a bigger issue. One overlooked feature of the old system may have done more than compensate for inflation. As we move to indexation, are we forgetting to reward risk?

Investment strategies

Bonds: The income and diversification trade-off

Rising yields have made bonds attractive again, but that does not mean they will behave as expected. As inflation, fiscal pressures and geopolitical risks reshape markets, the role of bonds may be more complicated than it appears.

Investment strategies

Why high-dividend investing deserves another look

Income investors have endured several lean years, but signs of a recovery are emerging. As opportunities improve, investors face an important choice between chasing headline yields and building a reliable source of income.

Investment strategies

Why 'overvalued' has been such an expensive word

Investors love simple rules, especially when markets appear stretched. Yet some of the strongest returns have arrived when the outlook seemed least attractive. This leaves an important question that history struggles to answer.

Investment strategies

AI – A good kind of bubble or just a bubble?

Investor obsession with AI is attracting unprecedented amounts of capital and confidence. But beneath the excitement lies uncertainties about returns, funding and risks that enthusiasts may not be paying enough attention to.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.