Enduring power of attorney (financial and personal matters)

 

Overview

An enduring power of attorney is a written document by which a person (called the “principal”) appoints another person(s) to be their attorney(s). The purpose of the appointment is so that the attorney(s) can make decisions for the principal if the principal loses the capacity to make those decisions.

A principal can appoint an attorney to make financial decisions and also for personal matters.

The principal can appoint the same attorneys to make these types of decisions, or different attorneys.

The principal can appoint a single attorney, a number of attorneys and alternative attorneys in the event that an attorney is no longer able to perform that role. If the principal appoints a number of attorneys, the principal must decide if the attorneys are to make decisions jointly, or make them separately, or make them based on a majority.

Attorneys must act honestly, in the best interests of the principal.

At the time of writing (June 2015) the Victorian government had not released the form to be used when making an enduring power of attorney. The form will be available online, probably from OPA’s website (www.publicadvocate.vic.gov.au).

Contact the OPA (tel: 9603 9500) for current information.

Appointments

To appoint an attorney, the principal must be over 18 years old and have the capacity to appoint an attorney. The POA Act sets out the capacity test to be applied (see s 4). It is presumed that people have capacity (s 4(2)) unless there is evidence to the contrary.

In making an appointment, the principal has to work out:

whether they should appoint one or more attorneys;

whether the attorneys for financial decisions be the same attorney for personal matters;

if more than one attorney is appointed, do the attorneys make decisions jointly (all agree), jointly and severally, severally (independently of each other), or by way of a majority;

if an attorney is unable to act, is it necessary to appoint another person to step into their shoes (an alternative attorney).

People who are under 18 or who are insolvent cannot be attorneys. As well, there are some people who cannot be an attorney for financial matters:

a person found guilty of a dishonesty offence (but section 28 (1)(c)(ii) has a work-around for this);

a person who is a care worker, a health provider or an accommodation provider for the principal.

If the principal thinks that their attorney may have a conflict of interest with the principal, this needs to be thought through. This could happen where the principal and the attorney own property jointly. Again there is a work-around for this set out in section 65.

The principal has to think through when the enduring power will begin. Should it begin immediately? This may make sense if the principal needs someone to help with banking. Should it begin only when the principal loses capacity? This may make sense regarding personal matters, such as determining where the principal lives when the principal is able to make those decisions. The POA Act has some default provisions if there is nothing specified in the power (see s 39).

The principal is able to place conditions on the attorney’s powers and give instructions in the document of appointment.

Execution, witnessing and acceptance

The principal has to sign the appointment form in front of two witnesses. The witnesses must be over 18 years old and be present at the same time. None of the attorneys can be a witness, nor a relative of the principal or the attorney(s), nor a care worker or accommodation provider for the principal. One witness must be either a medical practitioner or authorised to witness affidavits (s 35).

The witnesses have to certify the principal is acting freely and voluntarily and appears to have decision-making capacity (s 36).

There is provision for another to sign for the principal if the principal is unable to do so (s 34).

The attorney(s) must formally accept the appointment (ss 37–38).

Authority

The principal authorises their attorneys “to do anything” on their behalf “that a person can lawfully do by an attorney”.

There are two types of authority:

1 financial matters

2 personal matters.

Both of these are defined. Financial matters means “any matter relating to the principal’s financial or property affairs, and includes any legal matter that relates to the financial or property affairs …”. Sixteen examples are given.

A personal matter “means any matter relating to the principal’s personal or lifestyle affairs, and includes any legal matter that relates to the principal’s personal or lifestyle affairs”. Six examples are given.

“Legal matter” is also defined.

Section 26 sets out things that are not authorised:

making a will for the principal;

revoking an enduring power of attorney for the principal;

voting in elections;

consenting to the principal’s marrying or divorcing or entering a sexual relationship;

certain matters relating to children and surrogacy arrangements;

managing the principal’s estate after their death;

unlawful acts.

All powers are subject to any instructions or conditions set by the principal in the document of appointment.

Attorney’s obligations

The POA Act sets out principles that should guide the attorney’s decision-making where the principal has lost capacity to make decisions (s 21). The principal should participate in decision-making. The attorney should promote the principal’s personal and social wellbeing by being attentive to their dignity, their existing relationships, religion, values, culture and language.

Confidentiality is mentioned as a principle and as a duty for the attorney. Section 63 sets out a list of duties, but this list is not exhaustive as “nothing in this section is to be taken to affect any duty an attorney has at common law”. The listed duties include keeping accurate records and accounts, exercising reasonable skill and care, avoiding conflicts and not using the position for profit.

There are specific provisions regarding conflict transactions (ss 64–65), record keeping (s 66), gifts (s 67), maintenance of the principal’s dependents (s 68), separation of property (s 69) and remuneration of the attorney (s 69).

Revocation

There are various ways in which an enduring power of attorney can be revoked:

according to its terms (s 43);

by the principal (s 44);

by the death of the principal (s 51);

by the death of the attorney (s 52);

by the attorney’s losing capacity (s 53);

by the attorney becoming insolvent, becoming a care worker, health provider or accommodation provider for the principal, or being convicted of a dishonesty offence (s 54);

by the principal making a later, inconsistent, power of attorney (s 55);

by the attorney’s resignation (ss 56–61).

Section 62 sets out how a power may continue when one attorney ceases but there are others involved.

VCAT’s role

VCAT has an extensive jurisdiction in relation to enduring powers of attorney (part 8). VCAT can determine:

the scope and exercise of the enduring power of attorney;

the effect of any failure to execute the enduring power of attorney properly;

the validity of the enduring power of attorney;

the validity of any transaction made under the enduring power of attorney; and

the lodging, examination and auditing of accounts (see s 116).

The Act sets out matters VCAT must consider when determining a number of matters such as the validity of the enduring power of attorney and its proper execution. If the enduring power of attorney is found to be invalid, it is void from the beginning (s 119).

There are limitations on who can apply to VCAT in relation to an enduring power of attorney. If a person can demonstrate a special interest in the affairs of the principal to VCAT’s satisfaction, they will have standing to apply (see s 122). The Act has provisions as to who must be notified of an application (s 123) and who will be parties to the application (s 124).

There is scope for a rehearing to a more senior member of VCAT. An application for a rehearing must be made within 28 days of the making of the order (see divs 4, 5 of part 8).