Difference Between an Enduring and General Power of Attorney

A Power of Attorney (POA) is an important estate-planning tool which allows one person (the “attorney”) to deal with the assets of another (the “principal”). Essentially, the principal confers power on the attorney to deal with their assets in specified circumstances where the principal is unable to do so themselves.

There are two types of Power of Attorney; a General Power of Attorney and an Enduring Power of Attorney.

General Power of Attorney

A General Power of Attorney is the simplest Power of Attorney – it confers authority on the attorney to deal with the principal’s assets – their bank account, property and shares for example.

An attorney should be someone who you trust and who is over 18 years old. Both the attorney and the principal should get legal advice before signing a General Power of Attorney.

Two important things to note are that a General Power of Attorney ceases to operate if the principal dies or loses the mental capacity to make their own decisions and a General Power of Attorney does not authorise the attorney to make health or lifestyle decisions for the principal. Health or lifestyle decisions can only be made by a validly appointed guardian.

Enduring Power of Attorney

In contrast with a General Power of Attorney, an Enduring Power of Attorney continues to operate after the principal has lost the mental capacity to make her or his own decisions.

Because this gives the attorney significant powers, an Enduring Power of Attorney has additional requirements:

• the instrument must clearly state that the principal wishes the Enduring Power of Attorney to operate after she or he has lost mental capacity;
• the attorney must sign to indicate his or her consent; and
• the form must be signed by a prescribed witness, who must also sign a certificate on the form stating that she or he has explained the Enduring Power of Attorney to the principal and the principal appeared to understand this.

Conclusion

A Power of Attorney is an important and useful estate planning tool. You should carefully consider your circumstances and in light of this, make a decision as to whether an Enduring or General Power of Attorney is more appropriate for your situation. Make sure you get legal advice before executing an enduring or general Power of Attorney as this is a significant decision to make.