*The contents in this blog relates to legislation in Queensland.
Acting as attorney for the financial affairs of another person, whether that be pursuant to a general or enduring power of attorney document, is no easy task.
Failing to adhere to these statutory obligations can spell trouble for an attorney down the track; even years later when the principal who appointed the attorney has passed away. So what must the attorney do to avoid scrutiny?
Keep records and accounts
Section 85 of the Power of Attorney Act 1998 (the Act) requires that an attorney maintains ‘accurate records and accounts’ of all dealings or transactions made as attorney. Simply put, this means the attorney needs to keep records of what they pay for with the principal’s money (by retaining a summary and copies of invoices, bills, receipts etc.) regarding any expense for the principal’s benefit or which is their responsibility.
Failing to keep adequate records of expenditure invites scrutiny over every transaction the attorney undertakes which cannot be easily explained or proven.
Don’t mix funds
Recently, we have dealt with several instances of an attorney transferring funds from the principal’s bank account to an account owned by the attorney, ostensibly to pay for expenses on behalf of the principal. Even when that is the reason for doing so, section 86 of the Act states an attorney must not mix the assets of the principal with their own assets, except for any assets that were owned jointly by the attorney and principal prior to the attorney’s powers taking effect.
If an attorney mixes the principal’s assets or money with their own, there can be a number of consequences including a finding that the transaction/s are ‘conflict transactions’, or a finding that the transaction/s were induced by undue influence over the Principal.
Avoid conflict transactions
An attorney must not enter into any transaction on behalf of the principal that would benefit the attorney personally, or a relative, friend or business associate of the attorney, which is defined as a ‘conflict transaction’ in Section 73 of the Act. A conflict transaction is only allowed if the principal or a Court/tribunal expressly authorises the transaction.
An attorney must not undertake conflict transactions even if the principal undertook that type of transaction/s prior to the attorney’s appointment taking effect, or if the transaction is for the principal’s benefit too.
The attorney can be sued and/or removed for undertaking unauthorised conflict transactions, which carries serious consequences.
Get in touch with us
The matters addressed above are only some of the attorney’s obligations under the Act. It is crucial for an attorney to understand their obligations and what they must do to avoid being sued, removed or penalised for their actions on behalf of the principal.
If you need advice about your obligations as an attorney, wish to make an Enduring Power of Attorney (EPOA), or have questions or concerns regarding the actions of an Attorney, please contact our Wills and Estates team today on 07 3025 9000 for a confidential, obligation free discussion.