Who Can Make a Power of Attorney? Understanding Capacity and Legal Requirements
A Power of Attorney (POA) is a vital legal document that allows a person (the principal) to appoint another person (the attorney) to act on their behalf in financial, medical, or legal matters. This document is widely used in estate planning, business transactions, and situations where an individual may become unable to manage their affairs due to illness, disability, or absence. However, not everyone can create a Power of Attorney. There are strict legal requirements regarding who can make a POA, particularly concerning mental capacity and eligibility.
In this article, we will explore the fundamental aspects of who can make a Power of Attorney, the legal requirements, and how capacity is assessed. If you need assistance with drafting a Power of Attorney in Victoria, our team at Craigieburn Lawyers is here to help. Craigieburn Lawyers has extensive experience in estate planning, ensuring that your legal documents are correctly prepared and enforceable.
What Is a Power of Attorney?
A Power of Attorney is a legally binding document that grants authority to an appointed individual (the attorney) to make decisions on behalf of the principal. There are different types of POAs, including:
General Power of Attorney – Grants broad or specific authority over financial and legal matters but becomes invalid if the principal loses capacity.
Enduring Power of Attorney – Remains valid even if the principal loses capacity, making it crucial for long-term planning.
Medical Power of Attorney (or Medical Treatment Decision Maker in Victoria) – Grants authority to make medical treatment decisions if the principal becomes incapacitated.
Supportive Power of Attorney – Allows an appointed person to assist with decision-making without taking full control, applicable only when the principal still has capacity.
Each type serves a distinct purpose, but in all cases, the principal must meet specific legal requirements to make a Power of Attorney. Craigieburn Lawyers can help you determine which Power of Attorney best suits your needs and ensure it is properly executed.
Who Can Make a Power of Attorney?
1. Legal Age Requirement
To make a Power of Attorney in Victoria, the principal must be at least 18 years old. This ensures that the individual has the maturity and legal capacity to understand the implications of their decisions.
2. Mental Capacity Requirement
The most crucial aspect of creating a Power of Attorney is that the principal must have the legal capacity to do so. Capacity is defined as the ability to understand the nature and effect of the document they are signing. This includes:
Understanding the powers they are granting.
Knowing who they are appointing as their attorney.
Understanding when and how the Power of Attorney will take effect.
Being aware of the consequences of signing the document.
Making the decision voluntarily, without coercion or undue influence.
If a person lacks capacity at the time of signing, the Power of Attorney is not legally valid. Craigieburn Lawyers regularly assists clients in assessing capacity and ensuring that the legal process is properly followed to prevent future disputes.
How Is Capacity Determined?
Capacity is assessed on a case-by-case basis and is based on legal and medical evaluations. If there are concerns about a person’s capacity, professionals such as doctors, psychologists, or legal practitioners may be involved in making a formal assessment.
A person may be deemed to lack capacity due to:
Dementia or Alzheimer’s disease
Severe mental illness
Intellectual disability
Brain injury or stroke
Intoxication or drug impairment
If a person’s capacity is questionable, a medical certificate or an assessment from a healthcare professional may be required before drafting a POA. Craigieburn Lawyers can guide you through this process and provide legal support in ensuring compliance with Victorian laws.
What Happens If Someone Lacks Capacity?
If an individual does not have the mental capacity to create a Power of Attorney, they cannot legally appoint an attorney. In such cases, family members or caregivers may need to apply to the Victorian Civil and Administrative Tribunal (VCAT) for the appointment of an administrator or guardian to make decisions on behalf of the individual.
A guardianship or administration order grants decision-making power over financial and personal matters, but this is a more complex and lengthy process compared to establishing an Enduring Power of Attorney while capacity is intact.
Who Can Be Appointed as an Attorney?
When making a Power of Attorney, it is essential to choose a trustworthy and capable individual. The appointed attorney should be:
Over 18 years old
Of sound mind and capable of acting responsibly
Willing to act in the principal’s best interests
Not bankrupt (for financial POAs)
Someone the principal trusts completely
An attorney does not need to be a lawyer or financial expert but must act honestly, diligently, and in good faith. It is also possible to appoint more than one attorney and specify how they must act (e.g., jointly or separately). Craigieburn Lawyers can help you structure your Power of Attorney to ensure that your appointed attorney follows your wishes effectively.
Common Mistakes When Making a Power of Attorney
Creating a Power of Attorney is a significant decision, and there are common mistakes to avoid:
Failing to Ensure Capacity – If capacity is later disputed, the POA could be declared invalid.
Choosing the Wrong Attorney – Appointing an unreliable or dishonest person can lead to financial mismanagement or abuse.
Not Specifying Powers Clearly – Ambiguity can lead to confusion or legal disputes.
Not Keeping the POA Updated – Life circumstances change, and the POA should reflect current needs and relationships.
Not Seeking Legal Advice – A poorly drafted POA can cause complications, so professional guidance is highly recommended.
To avoid these mistakes, consult Craigieburn Lawyers, where our experienced legal team can ensure your Power of Attorney is comprehensive and legally sound.
Why You Need Legal Assistance for a Power of Attorney
While it is possible to draft a Power of Attorney using online templates, there are legal risks involved. Seeking professional assistance ensures that:
The document is legally valid and enforceable.
Your specific wishes and requirements are accurately reflected.
You have properly assessed the capacity requirements.
The document complies with Victorian legal standards.
At Craigieburn Lawyers, we can guide you through the process, provide tailored advice, and prepare a legally sound Power of Attorney that protects your interests.
Conclusion
A Power of Attorney is a powerful legal tool that allows individuals to plan for the future and ensure their affairs are managed by a trusted person. However, strict legal requirements must be met, especially concerning mental capacity and eligibility. Understanding who can make a Power of Attorney and ensuring proper execution is essential for its validity.
If you or a loved one need to establish a Power of Attorney, contact Craigieburn Lawyers for expert legal advice. We will help you navigate the complexities of legal capacity, document preparation, and attorney appointment to ensure your interests are fully protected.
For personalised assistance, reach out to Craigieburn Lawyers today and take the first step in securing your future planning needs.