Powers of Attorney
Note that the information appearing on this page applies to the State of Victoria, Australia. The law relating to powers of attorney in Australia is State based.
Who will be interested in the information on this page?
Anyone interested in information about:
- the different types powers of attorney in Victoria
- the powers given under each of the powers of attorney
- how to sign as an attorney
- what can happen if there is no power of attorney
- certified copies of powers of attorney
- what happens to a power of attorney upon the death of the donor
- the duties and obligations of attorneys
Powers of attorney allow another person to make various types of decisions on behalf of the donor/giver of the power. They are one form of “substituted decision making”.
Recent changes in Victoria:
The Powers of Attorney Act 2014 came into operation on 1st September, 2015.
The main changes brought about by this Act are:
- Enduring financial/legal and guardianship/lifestyle powers have been brought together in the one document (previously separate documents under separate pieces of legislation)
- Financial/legal powers are now know as “financial matters” and guardianship/lifestyle powers are now know as “personal matters”
- Specific requirements that attorneys act honestly, diligently and in good faith, and not to act where a conflict arises
- Significantly greater penalties for attorneys not complying with obligations (fines/imprisonment)
- Where there are multiple attorneys a decision by majority may be incorporated into the power
- A new type of attorney – the supportive attorney
- An attorney must allow the donor/giver of the power to participate in decisions in some circumstances
- VCAT can now order compensation to be paid for any loss arising out of failure by an attorney to comply with obligations
What has not changed?
Some things have not changed:
- Medical powers of attorney are unchanged
- General non-enduring powers of attorney are largely unchanged
- All existing powers of attorney made under the former legislation are still valid.
Types of powers of attorney:
There are four types of power of attorney in Victoria:
- The Enduring Power of Attorney – for financial/legal/personal/lifestyle decisions
- The General Non-Enduring Power of Attorney – any decision but usually for a specific/limited purpose or for a defined period of time
- The Medical Power of Attorney – for medical decisions
- The Supportive Attorney appointment (see below)
It is best to describe each Power of Attorney separately as each has a different purpose.
The Enduring Power of Attorney:
The word “enduring” needs to be explained. It means that the power has legal effect/validity after the donor (the person giving the power) becomes incapacitated, either permanently or temporarily.
This power allows the donee (the attorney – and there can be more than one) of the power to make financial, legal and lifestyle decisions on behalf of the donor of the power. The donor can choose to give all or some of these powers to the attorney and decide whether there are to be any conditions or limitations on powers given. For example, the donor may only give the attorney the power to make decisions in relation to lifestyle decisions, or may give one attorney power for lifestyle decisions and another attorney power for financial/legal decisions.
The legislation allows for a great deal of flexibility in relation to conditions and limitations that may be imposed on what the attorney can do. For example, the donor of the power could specify when the power commences, limit the decisions the attorney can make, require the attorney to seek professional advice for some types of decisions or consult with a family member when decisions have to be made. There are an infinite number of other conditions/limitations that could be put into the power. So, it is important to understand that it is not necessary to give unlimited powers to the attorney; the attorney may be restricted in any way. Having said that, it is often sensible to give full powers because if the donor becomes incapacitated full powers may be desirable and necessary.
A common condition put in this power is that it won’t commence until the donor becomes incapacitated. This means that the donor continues to make his or her own decisions while able to do so, and the attorney is able to act in the event of the donor becoming incapacitated.
Some important aspects of this power:
- There is a statutory form that must be used
- The signing and witnessing of the power must be carried out in accordance with strict rules set out in the legislation
- Records must be kept of all decisions/dealings carried out by the attorney/s under the power
- The donor must have legal capacity to make the power – if not, the power will be invalid
- Two or more attorneys may be appointed, either to act jointly, severally, jointly and severally or by majority (see Jargon Buster below).
- An alternate attorney may also be appointed (who can act in certain circumstances)
- An insolvent person cannot be appointed as an attorney
- A person convicted of an offence of dishonesty cannot act as an attorney (unless this is disclosed in the power)
- An attorney must always act in the best interests of the donor of the power
- An attorney cannot act when there is a conflict of interest – the donor’s interests conflicting with the attorney’s interests (unless specifically permitted in the power)
- An attorney cannot profit from the appointment
- One of the witnesses has to be an authorised person (eg, a solicitor)
Signing as an attorney:
The legislation does not provide for any specific form of words to be used. The old legislation provided that the attorney should sign “in such a way as to show that he does so as attorney for the donor of the power.” This legislation has now been repealed but it is still best practice to continue to sign in this way.
As an example, the attorney could sign his/her own signature and under that signature print out his/her name, and write the words – “As attorney for (name of donor) under an Enduring Power of Attorney dated (date of power), which power has not been revoked.”
Certified copies of the power:
Very often a person or organisation (say a bank) will want to hold a certified copy of the power of attorney. It is quite alright to provide the certified copy, but the original should always be retained by the attorney. A solicitor is one of the authorised persons who can certify copies.
What can happen if there is no enduring power of attorney?
If you become incapacitated it may well become necessary for someone to make decisions on your behalf. If an enduring power of attorney is in place the attorney under that power can make these decisions. If there is no enduring power of attorney in place, it will be necessary to go to VCAT for an administrator to be appointed. An application to VCAT is inconvenient, can be expensive and slow, and the administrator may not be the person you wish to look after your affairs.
Having an enduring power in place can accordingly lift a significant burden from your family in the event of incapacity (either temporary or permanent).
The Enduring Power of Attorney (Medical Treatment):
These powers are always “enduring” – they only come into operation upon the incapacity of the donor.
You can only appoint one attorney (called an “agent” in the legislation), and one alternative agent.
This power authorises your chosen attorney to make certain medical decisions on your behalf.
There are some decisions that a medical attorney cannot make – make an enquiry below if you need to know more about this.
Obviously it is important that your medical attorney is someone you can trust to make such important (often life and death) decisions on your behalf.
It is often considered a good idea to attach to the medical power of attorney what is sometimes referred to as an “advance health directive”. This is just a written document that outlines what you want to happen in certain critical medical situations you may face when unable to make the decision yourself. Short of such a written document you should discuss with your medical attorney what you would like to happen in certain (usually life threatening) medical situations. This will assist the attorney to make the decision you would have made in that situation.
Like the financial power one of the witnesses to the medical power must be an authorised person (a solicitor is one such authorised person).
The General Non-Enduring Power of Attorney:
This type of power is less often used than the Enduring Power of Attorney, but has a similar effect – it empowers the nominated attorney to make decisions of any kind specified by the donor.
The primary difference between this and the enduring power is that it becomes invalid if the donor becomes incapacitated. The enduring powers still have validity after incapacity.
General non-enduring powers are often used in combination with enduring powers. For example, a person may have an enduring power expressed to only commence upon incapacity, but may also have a general non-enduring power which gives limited powers which may, for instance, only be used when the donor is overseas.
In this way the donor can have the peace of mind of knowing that the attorney of his or her choice will be appointed upon any incapacity, but can also have temporary or limited general powers when needed. General powers can be limited in just about any way – they can be limited for specific tasks only, or limited in time. This firm for instance often obtains a General non-enduring power from a client which is limited do just one thing when that thing cannot be done conveniently by the client because of absence overseas or similar.
The Supportive Attorney appointment:
This is a new form of power of attorney. It is designed to enable a person with some incapacity to continue to make their own decisions. Strictly speaking it is not a power of attorney in the traditional sense, as the attorney does not make any decisions.
The donor appoints a person to assist him or her to make decisions (the “supportive attorney”). Amongst other powers that can be given, the attorney may be given the power to obtain information that will assist the donor to make the decision. A person with some intellectual incapacity may not be able to obtain all the information that might be required to make an informed decision. The supportive attorney can get that information, or otherwise help in the decision making process, and can also be given power to support the donor to communicate that decision and give effect to that decision.
The donor must have the relevant decision making capacity to make the appointment.
The supportive attorney cannot make decisions on behalf of the donor; their role is to support and assist the donor to make the decision.
The supportive attorney’s role comes to an end when the donor no longer has relevant decision making capacity.
The donor can appoint more than one supportive attorney.
The donor can give the supportive attorney powers in relation to financial, legal and personal matters, or any combination of those.
At time of writing (December, 2015) it is early days for this new form of power. It will be interesting to see how widely they are used in the months and years to come.
Death and powers of attorney:
The death of the donor of the power of attorney revokes the power. This is so for all powers of attorney.
After death it is the executor who has the legal authority to act on behalf of the estate.
Advice for attorneys:
Under the new powers of attorney legislation (commenced 1st September, 2015), attorneys must provide an undertaking, when accepting their appointment as an attorney, that they will act in accordance with the provisions of the Powers of Attorney Act, and they confirm that they understand the obligations of an attorney under that legislation and the consequences of failing to comply with those obligations.
It is accordingly important that attorneys, especially financial/legal attorneys under enduring powers of attorney, do understand their obligations.
More so because there are very significant criminal sanctions – fines (as of December, 2015 up to $91,000), and imprisonment, for failure to comply with obligations.
In summary these obligations include:
- That the attorney understands that the creation of the power of attorney does not mean that the principal cannot continue to make his or her own decisions about any matter, as long as the principal has appropriate capacity. A person may have capacity to do some things, but not others – capacity is “document specific”.
- That the attorney must always act in the best interests of the principal (the donor of the power).
- That the attorney is not entitled to any remuneration unless it is specifically authorised in the enduring power of attorney.
- That the attorney not dishonestly cause loss to the principal, or another person (“another person” has been interpreted as including beneficiaries under the Will of the principal if those beneficiaries suffer loss because the estate of the principal is diminished).
- That the attorney not obtain financial advantage for himself, or another person.
- That the attorney keep proper records of every dealing or transaction conducted under the power of attorney (in relation to financial matters and personal/guardianship matters).
- That the attorney is obliged to consult with the principal, as far as is possible, in relation to any decision made under the power
- That the attorney not delegate powers to another person.
- In relation to a principal who has diminished decision making capacity, that the attorney must allow the principal to participate in all decisions made to the extent possible, and that the principal is given all appropriate practical support to enable the principal to participate in decisions.
- Acting in a way that promotes the personal and social well-being of the principal.
- That the attorney not act where there is a conflict between the interests of the attorney and the interests of the principal (unless such conflict situation is specifically authorised in the power of attorney).
- That the attorney carefully respect any conditions and limitations specifically set out in the power of attorney (if any).
- Knowing that there are certain things that an attorney cannot do under a power of attorney – including making or revoking a Will for the principal, make or revoke a power of attorney for the principal, vote on behalf of the principal, consent to dissolving the marriage of the principal, make any decision in relation to a child of the principal, and manage the estate of the principal on the death of the principal (unless the attorney is also the executor nominated in the principal’s Will).
- That an attorney is ineligible to take on that role if he or she is an insolvent under administration, or becomes insolvent after being appointed as an attorney.
- That an attorney is ineligible to take on that role if he or she has been convicted or found guilty of an offence involving dishonesty (for financial attorneyship) unless the attorney has disclosed the conviction or finding of guilt to the principal and that this disclosure is formally recorded in the power of attorney.
- That if an attorney is appointed “jointly” with another attorney, all decisions must be made by agreement.
- That the attorney can no longer act in that capacity if the power of attorney is revoked, either by the principal or, for example, by VCAT.
“donor” – the person giving the power to the attorney
“principal” – the person giving the power to the attorney under the new Powers of Attorney Act 2014 (which came into operation on 1 September, 2015)
“donee” – the attorney appointed under a power of attorney
“enduring” – the power of attorney continues to have effect after the donor becomes unable to make decisions
“jointly” – two or more attorneys must agree to any decision made under a power of attorney
“severally” – two or more attorneys may made decisions under a power of attorney independently of each other
“jointly and severally” – two or more attorneys may act either together or independently
“VCAT” – Victorian Civil and Administrative Tribunal