Enduring power of attorney (financial and personal matters)


Overview

An enduring power of attorney is a written document by which 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 decisions for financial matters and 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 and in the best interests of the principal.

The form to appoint an enduring power of attorney is available on the website of the Office of the Public Advocate (OPA) (www.publicadvocate.vic.gov.au). There is no process to register an enduring power of attorney.

Appointments

To appoint an attorney, the principal must be over 18 years old and have the capacity to appoint an attorney. The POA Act (s 4) sets out the capacity test to be applied. It is presumed that people have decision-making 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 attorney 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(s) to step into their shoes (the alternative attorney(s)).

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 (there is a work-around for this set out in section 65 of the POA Act).

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.

A financial matter is “any matter relating to the principal’s financial or property affairs, and includes any legal matter that relates to the financial or property affairs” (s 3 POA Act). The POA Act provides 16 examples of financial matters.

A personal matter is “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” (s 3 POA Act). The POA Act provides five examples of personal matters.

With the commencement of the MTPD Act on 12 March 2018, an attorney for personal matters can no longer be appointed to have powers about “any matter that relates to medical treatment or medical research”. Attorneys appointed before 12 March 2018 continue to have the power to make medical treatment decisions as the person’s appointed medical treatment decision-maker (s 103 MTPD Act).

From 12 March 2018, a person can appoint a medical treatment decision-maker.

“Legal matter” is also defined (s 3 POA Act).

Section 26 of the POA Act sets out actions 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 (s 21) sets out principles that should guide the attorney’s decision-making where the principal has lost capacity to make decisions. 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 of the POA Act 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 of interest, and not using the position for profit.

There are specific provisions regarding conflict transactions (ss 64–65 POA Act), 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

Under the POA Act, 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 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 of the POA Act 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 (pt 8 POA Act). 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 POA Act (s 119) sets out matters VCAT must consider when determining 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.

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).

Both VCAT and the Supreme Court may order an attorney to compensate the principal for a loss caused by the attorney contravening a provision of the POA Act (ss 77–80). A claim (YDM [2016] VCAT 758) for compensation for losses alleged to be prior to the commencement of the Act (1 September 2015) was unsuccessful as the attorney could not have contravened an Act not in existence.