An enduring power of attorney is a document which allows you to appoint another person to make decisions on your behalf regarding your personal and financial affairs. When you prepare an enduring power of attorney, you are known as the principal and the person you appoint is called an attorney. Refer to Enduring power of attorney – Part 1 of this series for more information on the benefits of having an enduring power of attorney.
The role of the attorney
An attorney is required to act in the best interests of the principal and there are a number of specific obligations on the attorney from the time the document is signed, even if the document is not currently in use. For example, an attorney is required to act honestly and keep their property separate from the principal’s property.
What if my attorney does not act in my best interests?
Unfortunately there are cases of self interested adult children treating the financial management of their parent’s affairs as an open invitation to benefit themselves. There are also some adult children whose decision making is guided by a sense of entitlement to an early inheritance. This can lead to reckless and improper use of an enduring power of attorney, resulting in the financial mismanagement and sometimes the financial abuse of the principal.
The effect of financial mismanagement or abuse can lead to the principal having diminished assets and in some cases, insufficient assets to sustain their care, especially when a high level of care is required. In some of the more severe cases, a principal may be forced out of their home or other family members take up residence in the home of the principal unnecessarily and without invitation. Some cases of abuse of an enduring power of attorney also result in the principal being pressured regarding their will.
How do you know whether or not your attorney is acting in your best interests?
There is no obligation for an attorney to report to family members about their management of the affairs of the principal, however, an attorney is required to maintain the existing supportive relationships of the principal.
If anyone has concerns about the conduct an attorney and they are unable to resolve their concerns by contacting the attorney directly, they may wish to take steps to hold the attorney accountable for their conduct. If you have reason to be concerned about the conduct of an attorney, you may wish to report your concerns to the Office of the Public Guardian. The Public Guardian will investigate points of concern at their discretion.
Preventing misuse of an enduring power of attorney
In late 2016, findings were released from an inquiry by the Australian Law Reform Commission regarding elder abuse. The inquiry considered the issue of financial abuse under enduring powers of attorney and various solutions regarding how to prevent abuse of enduring powers of attorney.
Misuse of enduring powers of attorney is a widely known issue and some potential solutions include changing the requirements to prepare an enduring power of attorney, creating a national register for enduring powers of attorney and criminal culpability for abuse of power. However, until further safeguards are implemented, it is essential that you seek independent legal advice regarding how to best protect yourself when preparing your enduring power of attorney.
How can I safeguard my enduring power of attorney?
An enduring power of attorney is a valuable tool in securing your financial management and ensuring your affairs are managed by a person of your choice. You need to give careful consideration to the most appropriate person to appoint as your attorney. It is possible to appoint more than one attorney and to have conditions on your enduring power of attorney to restrict what your attorney can do and when they act on your behalf. The most appropriate enduring power of attorney for you will depend on a number of factors, including your needs, your asset structure and your family situation.
When you appoint a friend or relative to act as an attorney under your enduring power of attorney, it is important for the attorney to be aware that they have responsibilities from the time the document is signed. It is essential for anyone appointed as an attorney under an enduring power of attorney to be aware of their responsibilities and to seek legal advice if required.
It is important to think about the options for safeguarding your enduring power of attorney. Our team practices exclusively in Wills and Estates law and are here to guide you through the process of preparing an enduring power of attorney. If you require assistance preparing an enduring power of attorney or you need advice regarding an enduring power of attorney we invite you to contact us 07 3025 9000 for an obligation free discussion.