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.

 

RELATED ARTICLES

Estate planning made simple, Part II

Estate planning made simple, Part I

Planning to make your money last forever

banner

Most viewed in recent weeks

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 606 with weekend update

The boss of Australia’s fourth largest super fund by assets, UniSuper’s John Pearce, says Trump has declared an economic war and he’ll be reducing his US stock exposure over time. Should you follow suit?

  • 10 April 2025

4 ways to take advantage of the market turmoil

Every crisis throws up opportunities. Here are ideas to capitalise on this one, including ‘overbalancing’ your portfolio in stocks, buying heavily discounted LICs, and cherry picking bombed out sectors like oil and gas.

An enlightened dividend path

While many chase high yields, true investment power lies in companies that steadily grow dividends. This strategy, rooted in patience and discipline, quietly compounds wealth and anchors investors through market turbulence.

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

Latest Updates

Investment strategies

Getting rich vs staying rich

Strategies to get rich versus stay rich are markedly different. Here is a look at the five main ways to get rich, including through work, business, investing and luck, as well as those that preserve wealth.

Investment strategies

Does dividend investing make sense?

Dividend investing offers steady income and behavioral benefits, but its effectiveness depends on goals, market conditions, and fundamentals - especially in retirement, where it may limit full use of savings.

Economics

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

Strategy

Ageing in spurts

Fascinating initial studies suggest that while we age continuously in years, our bodies age, not at a uniform rate, but in spurts at around ages 44 and 60.

Interviews

Platinum's new international funds boss shifts gears

Portfolio Manager Ted Alexander outlines the changes that he's made to Platinum's International Fund portfolio since taking charge in March, while staying true to its contrarian, value-focused roots.

Investment strategies

Four ways to capitalise on a forgotten investing megatrend

The Trump administration has not killed the multi-decade investment opportunity in decarbonisation. These four industries in particular face a step-change in demand and could reward long-term investors.

Strategy

How the election polls got it so wrong

The recent federal election outcome has puzzled many, with Labor's significant win despite a modest primary vote share. Preference flows played a crucial role, highlighting the complexity of forecasting electoral results.

Sponsors

Alliances

© 2025 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.