Hidden Meanings in Prescribed Terms of a Power of Attorney

Posted on Sep 22, 2021 by Liam Tobin   |   Categories: Wills & Estates, Wills, Powers of Attorney & Enduring Guardianships

A Power of Attorney can be created by someone (“the principal”) to appoint a desired person or people to make financial and property decisions for the principal in circumstances including where they lose the ability to make their own decisions. There is a prescribed version of a Power of Attorney which contains prescribed phrases with very specific meanings, which are not always clear when reading the document, but must be complied with.

The Powers Of Attorney Act 2003 (NSW) sets out rules applying to power of attorney documents created after the Act commenced.

Power of Attorney documents are commonly in the form outlined by the regulations to the Act, most recently being the Powers of Attorney Regulation (2016) NSW, these complying documents are referred to as a “Prescribed Power of Attorney” for the purposes of the Act.

This commonly used form of document contains several phrases that, regardless of whether they seem simple or confusing, have legal definitions and rules that are not apparent on the face of the document.

Schedule 3 of the Act sets out the meaning and conditions of prescribed expressions and authorisations used in a Prescribed Powers of Attorney. These Include:-

 

Authority to give gifts

A Prescribed Power of Attorney may include the following authorisation:

I authorise my attorney to give reasonable gifts as provided by section 11 (2) of the Powers of Attorney Act 2003.

The prescribed expression authorises an attorney to give a gift only if the gift is:

  • to a relative or close friend of the principal, and is of a seasonal nature or because of a special event (including, for example, a birth or marriage), or
  • a donation of the nature that the principal made when the principal had capacity or the principal might reasonably be expected to make,

A “close friend” is defined as an individual who has a close personal relationship with the principal and a personal interest in the principal’s welfare.

A “relative” of a principal is defined as the mother, father, spouse (including wife or husband), daughter, son, step-daughter, step-son, sister, brother, half-sister, half-brother or grandchild of the principal or of the principal’s registered or domestic partner.

 

Authority to confer benefits on attorney or on third parties. 

A Prescribed Power of Attorney may also include either or both of the following authorisations:

I authorise my attorney to confer benefits on the attorney to meet the attorney’s  reasonable living and medical expenses as provided by section 12 (2) of the Powers of Attorney Act 2003.

OR

I authorise my attorney to confer benefits on [a named third party] to meet their reasonable  living and medical expenses as provided by section 13 (2) of the Powers of Attorney Act 2003.

The prescribed expression authorises an attorney to confer a benefit on the attorney, (or the named third party as appropriate) only if the benefit meets (whether in whole or in part) any expenses incurred (or to be incurred) by the attorney (or the named third party as appropriate) in respect of any of the following:

  • housing,
  • food,
  • education,
  • transportation or
  • medical care and medication.


Reasonableness

The prescribed expressions above all also include reference to reasonableness.

The value gift given, or the benefit to the attorney or the named third party, must not be more than what is reasonable having regard to all the circumstances and, in particular, the principal’s financial circumstances and the size of the principal’s estate.

 

If you need to discuss acting within the terms of an existing Power of Attorney or discuss putting a new Power of Attorney in place, contact Baker Love Lawyers.

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