Power of Attorney vs Enduring Power of Attorney: Understanding the Difference

What Is a Power of Attorney?

A Power of Attorney is a legal document authorising another person (the “attorney”) to make financial and legal decisions on behalf of the person granting the authority (the “principal”).

The attorney does not need to be a legal practitioner. They can be a friend, family member, or even an organisation like a trust.

Why You Might Appoint a POA

In practice, a Power of Attorney is often used for practical reasons, such as:

• Managing bank accounts and paying bills
• Buying or selling property
• Signing documents
• Attending to business or investment matters

You may put these arrangements in place when you are unable, unavailable, or (in rarer cases) unwilling to manage your affairs personally for a period of time. It might be travel, recovery from illness, or a temporary absence.

Limitations and Legal Implications

A Power of Attorney has a limited duration. Crucially, it only operates while you as the principal have capacity. If you lose the ability to make decisions, the authority granted under a Power of Attorney ends. The attorney can no longer lawfully act, even if doing so would be practical or necessary.
This is where the difference between a Power of Attorney and an Enduring Power of Attorney becomes critical.

What Is an Enduring Power of Attorney?

An Enduring Power of Attorney (EPOA) also allows an attorney to make decisions on behalf of a principal. The difference is that an EPOA continues to operate even if the principal loses capacity.
The concept of enduring came about because there is a basic legal principle that an attorney can do no more than the donor who gives the power of attorney. The enduring power of attorney lasts throughout the life of the donor or until revoked by the donor. Provided the donor was of sound mind when the power of attorney document was executed, any later deterioration in the state of mind of the donor is not relevant.

Why You Might Appoint an EPOA

This ‘enduring’ feature allows an EPOA to function as a safeguard against future incapacity arising from events such as dementia, stroke, serious illness or injury. 

An Enduring Power of Attorney typically covers decisions such as:

• Ongoing management of bank accounts and investments
• Paying expenses and meeting financial obligations
• Buying, selling or maintaining property
• Managing financial affairs over the longer term

Importantly, an Enduring Power of Attorney does not extend to personal, lifestyle or medical decisions. In Western Australia, those matters are generally dealt with through a separate Enduring Power of Guardianship. 

This separation of financial authority from personal decision-making helps ensure decisions are made by the right people under the right authority.

At a Glance: Key Differences Between Power of Attorney and Enduring Power of Attorney

While both documents allow someone else to manage financial and legal matters on your behalf, the difference between a Power of Attorney and an Enduring Power of Attorney becomes most important when questions of capacity arise. In those situations, it’s imperative to have the right document in place for the right purpose.

Why Having an Enduring Power of Attorney Matters

If you lose capacity without an Enduring Power of Attorney in place, your family members do not have an automatic right to step in and manage your affairs. This makes dealing with banks, government bodies, service providers, and land registries extremely difficult.

Family members may then need to apply for a formal appointment as an administrator through a tribunal or court process. This can be time-consuming, costly, and stressful, particularly when decisions need to be made quickly.

An Enduring Power of Attorney avoids this uncertainty. It allows people you trust to act in accordance with your wishes and without delay.

In practice, many people benefit from having an Enduring Power of Attorney alongside other estate planning documents, so their affairs can be managed smoothly if circumstances change.

Who Should You Choose as Your Attorney?

Needless to say, appointing an attorney is not a decision to make lightly. The role carries responsibilities and, in some cases, legal obligations.

An attorney must act with integrity and make decisions in your best interests. At a minimum, they must be:

• Over the age of 18
• Capable of understanding the role and financially competent
• Trustworthy, reliable, and free from conflicts of interest
• Willing and available to act in your affairs

To reduce the risk of disputes or misuse of authority, some people cannot be granted Power of Attorney:

• Minors under 18
• Bankrupt or insolvent individuals
• Your paid carer
• Anyone convicted of a dishonesty-related offence unless disclosed

You may even choose to appoint more than one attorney, or a substitute such as your estate lawyer as a safeguard.

How to Create a Power of Attorney or Enduring Power of Attorney

There are no significant differences in the basic mechanisms to create a Power of Attorney vs an Enduring Power of Attorney. Both processes involve:

• Deciding what authority to give your attorney
• Completing the required documentation
• Signing in the presence of two witnesses
• Distributing copies to relevant parties 

However, it is always worth seeking professional guidance to ensure the documents clearly reflect your wishes, comply with Western Australian law, and operate as you intend. 

The Benefits of Having Barnard Lawyers On Your Side

Our wills and estates lawyers specialise in creating Power of Attorney and Enduring Power of Attorney documents that:

• Comply with legislation
• Outline a clear and appropriate scope of authority 
• Include safeguards that reflect your intentions
• Align with your broader estate plan

We can also tailor to suit individual circumstances. For example, limiting authority to certain transactions or timeframes, helping you understand the differences between a Power of Attorney vs Enduring Power of Attorney vs Enduring Power of Guardianship, or deciding when an Enduring Power of Attorney should begin operating.

Our focus is on helping you plan ahead so your financial affairs are managed smoothly, with less likelihood of legal complications or added stress on your loved ones.

At Barnard Lawyers, we can assist with creating an Enduring Power of Attorney as part of a considered estate and incapacity plan. Should you wish to discuss your situation, please contact us on 08 6114 5920 or email info@barnardlawyers.com.au.

Please note: This article provides general information only and does not constitute legal advice.