Using a General Power of Attorney to protect your business
A General Power of Attorney (GPA) is a legal document that grants an individual the authority to act on behalf of another person in legal and financial matters. This guide will explain what a General Power of Attorney is, its applications, and the considerations when creating or accepting such a responsibility.
What is a General Power of Attorney?
A General Power of Attorney is a document that enables a individual to appoint another trusted person, to manage their personal and business affairs. The scope of a GPA can be broad or narrow decided on by the business owner, giving the attorney the power to handle activities such as day to day business administration, financial transactions, to property management, on behalf of the donor.
Unlike a Lasting Power of Attorney (LPA), a GPA is typically used for a set period or specific circumstances and ceases to be valid if the donor becomes mentally incapacitated.
Applications of a General Power of Attorney
A General Power of Attorney can be utilised in various scenarios, including but not limited to:
Financial Management: The attorney can manage bank accounts, pay bills, collect debts, and conduct other financial transactions.
Property Transactions: They can buy, sell, or lease property on behalf of the donor.
Business Operations: If the donor owns a business, the attorney can make decisions and manage operations in their absence.
Legal Proceedings: The attorney can represent the donor in legal matters, ensuring their interests are safeguarded.
Personal Affairs: This can include managing personal investments, insurance, and other non-business-related activities.
Creating a General Power of Attorney
To create a GPA, the donor must be at least 18 years old and possess the mental capacity to understand the implications of the document. The process involves the following steps:
Drafting the Document: The GPA must be clearly written, outlining the powers granted to the attorney. It is advisable to seek legal guidance to ensure the document is comprehensive and legally sound.
Signing and Witnessing: The donor must sign the document in the presence of a witness. The witness must also sign the document, attesting to the donor’s signature.
Registration: While a GPA does not need to be registered with any authority to be valid, it is prudent to notify relevant institutions (e.g., banks, business partners) of the existence of the GPA to avoid potential disputes or misunderstandings.
Responsibilities and Limitations
An attorney appointed under a General Power of Attorney has a fiduciary duty to act in the best interests of the donor. They must avoid conflicts of interest and keep the donor’s affairs separate from their own. It is crucial for the donor to choose someone trustworthy and capable, as the attorney’s actions can significantly impact their financial and legal standing.
However, there are limitations to the powers granted under a GPA. The document cannot be used to make decisions related to the donor’s health and welfare, which would require a Health and Welfare LPA. Additionally, the GPA becomes invalid if the donor loses mental capacity, emphasising the importance of timely and appropriate use.
Revoking a General Power of Attorney
The donor can revoke a General Power of Attorney at any time, provided they have the mental capacity to do so. Revocation must be done in writing, and relevant parties must be informed to ensure the attorney’s authority is effectively terminated.
A General Power of Attorney is a powerful tool that can provide peace of mind and practical assistance in managing one’s affairs. Whether used for financial management, property transactions, or business operations, it is essential to understand its scope, responsibilities, and limitations. Legal advice should be sought to ensure the document is properly drafted and executed, safeguarding both the donor and the attorney.
For more information on creating a General Power of Attorney or any other legal matters, please contact our specialists for expert guidance and support.
