Enduring Power of Attorney and abuse

Posted on Oct 28, 2019 by Liam Tobin   |   Categories: Wills & Estates

An Enduring Power of Attorney is a legal document that allows a person (the principal) to nominate one or more persons (referred to as attorneys) to act on behalf of the principal.

An Enduring Power of Attorney gives the attorney the authority to manage the legal and financial affairs of the principal in the event that the principal loses the capacity to make decisions in the future, including buying and selling real estate, shares and other assets, operating your bank accounts and spending money on your behalf.

The Powers of Attorney Act 2003 (NSW) (“the Act”) describes a power of attorney document that is in or to the effect of the form prescribed by the regulations to the Act as a Prescribed Power of Attorney.

While the Prescribed Power of Attorney confers on the attorney the authority to do on behalf of the principal anything that the principal may lawfully authorise an attorney to do, it is important to know that there are limits on this power, and that the Prescribed Power of Attorney provides for options for the Principal to tailor the limits on this authority.

A Prescribed Power of Attorney does not authorise an attorney to give a gift of all or any property of the principal to any other person unless the instrument creating the power expressly authorises the giving of the gift.

A Prescribed Power of Attorney does not authorise an attorney to do any act, as a result of which a benefit would be conferred on the attorney, or a third party unless the instrument creating the power expressly authorises the conferral of the benefit.

In the event that the principal elects to authorise the giving of gifts or conferral of benefits on other persons, Schedule 3 to the Act provides further explanation of the allowed scope of these prescribed authorisations.

A Prescribed Power of Attorney is also subject to compliance with any conditions or limitations specifically included by the principal in the instrument creating the power.

Unless the Power of Attorney allows for benefits to be conferred on the attorney or a third party, all acts done by the attorney must be for the benefit of the principal.

The Act provides for review of a Power of Attorney and provides the Guardianship Tribunal with powers to make a range of orders in relation to a Power of Attorney, including:

  • varying the powers conferred by the power of attorney;
  • removing a person from office as an attorney;
  • requiring an attorney furnish accounts and other information as to dealings and transactions made by the attorney to the tribunal; and
  • revoking all or part of the power of attorney.

In the event that an attorney acts outside the scope of actions authorised by the Power of Attorney, there are a range of civil and criminal remedies and penalties.

Where the attorney obtains a profit as a result of a transaction in conflict with their fiduciary duties, the Court has the ability to set aside the transaction

From a criminal law perspective, financial abuse and exploitation can be prosecuted through a variety of channels including misappropriation of property, theft or fraud.

Power of Attorney laws vary from State to State, however in the NSW context, the Act does impose penalties of up to 5 years imprisonment in the event that the attorney performs acts as an attorney knowing that authorisation under the Power of Attorney for such actions has been suspended or terminated.

If you have questions regarding putting in place or amending your own Power of Attorney, acting as someone else’s attorney, or concerns over abuse by an appointed attorney, contact Baker Love Lawyers.