At some point in time while dealing with property matters you may be granted Power of Attorney.
If you have been granted Power of Attorney for a loved one or close associate you have usually been chosen because they trust you, and are in need of your help. Decisions need to be made, sometimes under pressure.
Or alternatively, you may even have cause at some stage to grant Power of Attorney over your own affairs, to someone else. The following information provides some key points.
What is Power of Attorney?
Firstly, Power of Attorney (POA) is an agreement that enables a person, or people, to act on behalf of another person.
If for example a person (the principal) has a reduced ability to make decisions about, or manage, their financial or personal matters, they can nominate another person to have Power of Attorney.
Enduring Powers of Attorney is often associated with the elderly who are losing their ability to manage their own affairs as well as they used to.
This kind of Power of Attorney might be granted to an immediate family member, a very close friend, or other person the ‘principal’ trusts to better manage their financial decisions.
EPA (Enduring Power of Attorney) can be Financial and/or Personal.
Enduring Power of Attorney decisions about financial matters include:
1. Purchase and sale of property (real estate)
2. Payment of bills
3. Transactions with bank accounts
4. Decisions and transactions with Investments
Your attorney for financial matters cannot enter into a transaction where there is, or may be a conflict between their duty to you and their own interests, unless the principal, or the Victorian Civil & Administrative Tribunal (VCAT) has authorized the transaction.
Enduring Power of Attorney decisions about personal matters include:
1. Where and with whom you live
2. Who may visit you
What range of powers does Power of Attorney have?
Before Power of Attorney is given, the person who needs assistance decides which matters their attorney will be able to make decisions on. Conditions can be placed on the exercise of power, with specific instructions.
If no limits are specified by the nominating person (principal) then the attorney will be able to make any decisions about the principal’s financial and personal matters.
What is a Supportive Attorney?
A Supportive Attorney can be appointed by a person who feels they have the ability to make financial or personal decisions, provided they are supported by an advisor.
The principal who has appointed the Supportive Attorney retains the decision making authority.
The principal can give power to the Supportive Attorney to access information from organisations like banks, utility providers, health care providers, in order to communicate the principal’s decisions and to act on the decisions.
What sort of decisions can a Supportive Attorney make?
• All financial matters other than in a relation to a ‘significant financial transaction’ (i.e. making or continuing an investment, a real estate transaction – taking out a loan, and buying and selling substantial personal property).
• All personal matters
• All personal and financial matters, or
• Specific personal, financial or other matters
Appointment of a Medical Treatment Decision Maker
There is another category of guardianship that relates specifically to medical matters. This is enabled by a legal document titled ‘Appointment of a Medical Treatment Decision Maker’.
A person may appoint someone to be their medical treatment decision maker if they feel they are likely to be unable to make decisions about their own medical treatment and will need someone else to make those decisions for them.
To make this appointment, they need to complete a legal document titled ‘Appointment of a Medical Treatment Decision Maker’ and signed in the presence of someone able to witness affidavits in Victoria, or a medical practitioner.
Duties of the Attorney
An attorney must:
• Act honestly, diligently and in good faith
• Exercise reasonable skill and care
• Not use the position for profit (unless the enduring power of attorney authorizes the attorney to be paid)
• Avoid acting where there is, or may be, a conflict of interest (unless the enduring power of attorney specifically authorizes this)
• Not disclose confidential information (unless authorized by the enduring power of attorney or by law)
• Keep accurate records and accounts
Powers a principal cannot give to an attorney
Under an EPA (Enduring Power of Attorney) an attorney cannot do any of the following on behalf of the principal:
• Make decisions about the care or wellbeing of the principal’s children
• Make or revoke a Will
• Make or revoke an Enduring Power
• Consent to marriage or a sexual relationship or dissolve a marriage
• Make decisions about the adoption of a child
• Enter into surrogacy arrangements
• Manage the estate of the principal on their death
• Consent to an unlawful act
How does Power of Attorney apply regarding real estate?
The power is wide and can extend to property-related issues like:
• Buying property in the principal’s name, using the principal’s funds,
• Leasing out a principal’s property and choosing the tenants,
• Managing the principal’s other assets,
• Banking, or collecting rent or debts due to the principal,
• Making investment decisions, which could include selling the principal’s house or subdividing land it’s on.
Limited Powers of Attorney regarding real estate
Power of Attorney can also be limited so the holder can perform specific tasks only and make limited decisions only. These types of Power of Attorney will also have a time limit.
For example if a home owner is out of the country but wants to sell a property quickly, they might give Limited Power of Attorney to someone they trust who is on the ground and better placed to carry out the transaction.
Or a property owner may know they will be temporarily incapacitated with health problems. They may want to have another person in place to make decisions and act for them until they (the principal) recover and are well enough to continue managing their own property and assets again.
Seek legal advice before granting Power of Attorney
So an enduring Power of Attorney allows that attorney to stand in the principal’s shoes. Because of the wide-reaching effects, it’s recommended anyone thinking about granting an Enduring Power of Attorney should seek independent legal advice about the implications of making the grant, and how this might impact on their personal affairs and financial situation.
Because of the broad nature of authority given away with an Enduring Power of Attorney, the courts need a high level of assurance that the principal has a clear understanding of what they are doing when they grant the power.
Can Power of Attorney be challenged?
There are many cases of challenges to Enduring Powers of Attorney, which have succeeded, because the principal either had no real grasp of either what the document was, or what the contents of the Enduring Power of Attorney actually are. It’s important to know that ‘enduring’ means the Attorney’s power can only be revoked while the principal has the same mental capacity they had when they granted the power.
Understandably, if a principal grants an Enduring Power of Attorney to someone, then subsequently loses their mental capacity to make decisions, they would certainly be unable to rescind the Attorney’s powers.
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