What is a Power of Attorney?

The explanatory text from the Land Registry Services standard form of Enduring Power of Attorney is a useful start to this question:

An enduring power of attorney is a legal document that allows you (the ‘principal’) to nominate one or more persons (referred to as an attorney) to act on your behalf. An enduring power of attorney gives the attorney the authority to manage your legal and financial affairs, including buying and selling real estate, shares and other assets, operating your bank accounts and spending money on your behalf.

You should probably re-read that paragraph a few times and take note of the very powerful position an attorney assumes. For example, if your attorney takes a certified copy of the appointment to your bank, the bank will permit them to operate that account as if it was you.

While an attorney has such wide powers to manage the legal and financial affairs of the principal, the attorney is not automatically authorised to use those powers howsoever he or she chooses. An attorney must only act in the interests of the principal and cannot receive a benefit from the role unless expressly authorised. Generally speaking it is better to not authorise an attorney to benefit from the role unless there is a specific, and very good, reason to do so.

A power of attorney is governed by the Powers of Attorney Act 2003 (NSW), which also notes that the appointment itself can limit the powers of the appointment by the imposition of limitations or restrictions. For example it might restrict the power from dealing with real estate assets or only be effective on the occurrence of certain events.

A Power of Attorney is not for health and welfare matters. For those kind of decisions  you need to appoint an Enduring Guardian.

There is also a very important difference between a General and Enduring Power of Attorney.