Letter of Authority vs Power of Attorney

A letter of authority is a simple signed letter allowing someone to do a specific task for you if the organisation accepts it. A power of attorney is a formal legal document appointing someone to act on your behalf, with set signing rules. For property, bank dealings and legal transactions, you usually need a power of attorney.

Key takeaways

• A letter of authority is informal and task-specific. Whether it works depends on the organisation receiving it.
• A power of attorney is a formal legal instrument with signing and witnessing requirements set by law.
• Letters of authority suit simple tasks: collecting documents, discussing an account, picking up mail.
• Powers of attorney are needed for signing on your behalf: selling land, operating accounts, entering contracts.
• For use overseas, either may need to be signed before a notary and apostilled by DFAT.

What is a letter of authority?

A letter of authority, sometimes called an authority letter or letter of authorisation, is a document you write and sign to tell an organisation that a named person may do something on your behalf. Typical examples include allowing a relative to collect your passport or a certificate, to speak to your bank or phone company about an account, to pick up a parcel, or to lodge a form. It usually states who you are, who the authorised person is, exactly what they may do, and for how long, and is signed and dated by you.

A letter of authority is not a formal legal appointment. It has no set form in law, and the organisation receiving it decides whether to accept it, often asking to see identification for both of you and sometimes requiring its own authority form instead. Many government agencies and banks have their own forms for nominating someone to deal with them. Our guide to what to do if a signatory cannot attend covers related situations, including when the person concerned is in hospital or overseas.

What is a power of attorney?

A power of attorney is a legal document by which you, the principal or donor, appoint someone, the attorney, to act on your behalf in financial or legal matters. It can be general, covering a wide range of matters, or limited to particular tasks, and it can be enduring, continuing if you lose capacity. Powers of attorney are governed by law, with requirements for their form, signing and witnessing, and in some cases registration before they can be used for land.

Because an attorney can sign documents that bind you, such as a contract of sale or a bank transfer, third parties rely on the formality of the document to be confident the attorney has authority. That is why banks, land registries and courts generally require a power of attorney, not a letter, before they will let someone sign for you. Our guide to powers of attorney explains the different kinds.

When is a letter of authority enough?

A letter of authority is usually enough for simple, low-risk tasks where the organisation only needs to know you have agreed to someone else acting, not for them to bind you legally. Collecting a document you have ordered, discussing an existing account, lodging a form you have already signed, or picking up items on your behalf are common examples. Even then, check the organisation's rules: many have their own authority forms, and some will only deal with the account holder or a formally appointed attorney.

Task	Usually enough	Why
Collect a certificate or passport you ordered	Letter of authority, if the office accepts it	A simple, specific task
Discuss a phone or utility account	The provider's own authority form	Provider sets its own process
Deal with Centrelink or the ATO	The agency's own nominee arrangements	Agencies have formal nominee processes
Operate a bank account	Power of attorney or the bank's own form	The attorney signs for you
Sell or mortgage land	Power of attorney, often registered	Registries need formal authority
Sign a contract for you	Power of attorney	The contract binds you

When do you need a power of attorney?

You need a power of attorney when someone must sign documents or make decisions that bind you: selling or buying property, operating bank accounts, entering contracts, dealing with investments, or managing your affairs while you are overseas or unwell. A letter of authority will not usually be accepted for these, because the third party is relying on the attorney's legal authority and needs a document that meets the law's requirements.

If you may lose capacity in future, an enduring power of attorney is the relevant document, and each Australian state and territory has its own form and witnessing rules for it. For health and lifestyle decisions, a separate appointment, such as an enduring guardian or advance care directive, may be needed, depending on the state. See a lawyer if your affairs are complex. Our guide to enduring guardianship forms covers that side.

What about documents going overseas?

Letters of authority are common in international paperwork: authorising a relative to collect a birth certificate from a registry abroad, to apply for a police clearance on your behalf, or to deal with a foreign university. Many foreign offices want the letter signed before a notary, and sometimes apostilled by DFAT, so they can be sure the signature is genuine. Some countries' offices also expect the letter to be in their language, or to follow a particular form.

For more significant matters abroad, such as selling property, dealing with an inheritance or operating a bank account, a foreign office will usually require a formal power of attorney in the form its law expects, notarised in Australia and apostilled or authenticated, and often translated and registered locally. Get the wording from the foreign office or a lawyer there first. Our guide to international powers of attorney explains the process.

How should a letter of authority be written?

Keep it short, clear and specific. State your full name, date of birth and identification details; the authorised person's full name and identification details; exactly what they may do, for example "collect my birth certificate from the registry office"; any time limit; and that you consent to the organisation dealing with them for that purpose. Sign and date it. Attach copies of both people's identification if the organisation asks for them, and check whether it wants the letter witnessed or notarised.

Can either be revoked?

Yes. A letter of authority can usually be withdrawn by telling the organisation in writing that the authority has ended, and it often lapses anyway once the task is done or any stated time limit passes. A power of attorney is revoked in the way the law and its terms allow, typically by a written revocation given to the attorney and to anyone relying on the power, and registered where the power was registered. Our guide to notarising a power of attorney covers the overseas form.

What about a limited power of attorney?

Between the two sits the limited, or specific, power of attorney: a formal power that authorises the attorney to do only a particular thing, such as sign a contract of sale for one property, or deal with one bank account. It has the legal force of a power of attorney, so third parties can rely on it, but it does not hand over control of all your affairs. It is often the right choice when a letter of authority is not enough but a general power would give more authority than you want. A lawyer can draft one to cover exactly the task needed.

How do you choose and prepare?

1. Define the task: collecting or discussing something, or signing and deciding for you.
2. Ask the organisation what it accepts, and whether it has its own authority or nominee form.
3. Use a letter of authority for simple tasks it accepts, clearly worded and signed.
4. Use a power of attorney for signing on your behalf, prepared with advice where needed.
5. Notarise and apostille either document if it is going overseas and the foreign office asks.

What does this look like in practice?

Here is an illustration, not a real case. Sanjay lives in Perth. He needs his brother in India to collect his updated birth certificate from the municipal office there, and later to sell a plot of land he owns.

For the birth certificate, the municipal office accepts a letter of authority, signed before a notary in Perth and apostilled, naming his brother and the specific task. For the land, the sub-registrar requires a formal power of attorney in the local form, which Sanjay's Indian lawyer drafts. He signs it before a notary, DFAT adds an apostille, and his brother arranges its registration in India before the sale.

In short

A letter of authority lets someone carry out a specific, simple task for you, if the organisation accepts it. A power of attorney is a formal legal appointment that lets someone sign and act on your behalf, and is needed for land, bank dealings and contracts. For use overseas, either may need to be signed before a notary and apostilled. Check what the receiving organisation accepts before choosing.

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