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PLEASE NOTE: This article was published on the date listed below and may now contain information that has since been updated or changed. We have retained this article as it may still contain helpful comments. However, we advise you to make an appointment to see us for the most up to date information on this topic.

August 2008

Enduring Power of Attorney - An Update

A recent High Court decision has highlighted the importance of a Will reflecting the current circumstances and current intentions of the Will Maker (the person who makes a Will).

We have long advocated the importance of every adult having Enduring Powers of Attorney.

However, over the last 19 years there have been occasions when Attorneys, under such Enduring Powers of Attorney, have abused their position of trust. As a result, there was a significant change to the Law last year which becomes effective on 25th September 2008.

New Forms of Enduring Power of Attorney

New forms will be required to be used for all future Enduring Powers of Attorney. Legal advice has to be given to the Donor (the person giving the Power of Attorney) without the intended Attorney being present. The legal advice must be given by a Lawyer or Legal Executive who must explain the effects and implications to the Donor. The Lawyer or Legal Executive must be satisfied that the Donor has legal capacity to understand the nature of the power being given. The Lawyer or Legal Executive must witness the Donor’s signature and complete a certificate that the requirements of the Law have been satisfied. The Lawyer or Legal Executive must not witness the Attorney’s signature.

Presumption of Competence and Duty to Consult

There is a presumption that the Donor is competent to manage his/her own affairs without the assistance of the Attorney. It is only when there is sufficient medical evidence of lack of competence that the Attorney should step in.

Even in such circumstances competence is not a black and white issue. There will always be degrees of competence based on the age and mental health of the Donor and the type of issue that may need to be decided. For example, a Donor may be competent to purchase a $2.00 raffle ticket but not be competent to purchase a $2,000,000.00 home. In all cases the Attorney has a duty to consult with the Donor dependent upon the Donor’s degree of competency.

Advanced Directives 

A new provision in the Law requires an Attorney for an Enduring Power of Attorney as to Personal Care and Welfare to give consideration to any Advance Directive made by the Donor. Over the past few years, a number of our clients have taken the opportunity of having us prepare Advance Directives for them. It is pleasing to note that Parliament has now recognised the usefulness of Advance Directives by giving statutory recognition to them.

Providing Information

The new forms of Enduring Power of Attorney enable the Donor to specify the names of those whom the Donor may wish to be entitled to information under the control of the Attorney. Previously, the Attorney was not obliged to provide any information unless ordered by the Family Court to do so. The Donor can also specify the nature of the information that should be provided by the Attorney.

Criminal Offence

The Attorney must retain records of all financial transactions undertaken by the Attorney on behalf of the Donor. The change in the Law makes the failure to keep such records a criminal offence. 
Medical Certification of Incapacity

The previous forms of Enduring Power of Attorney referenced the phrase “if I become mentally incapable”. The concern was always as to who would decide the issue of mental incapacity.

The new Law now requires certification of incapacity to be by a medical practitioner on a prescribed form. The Donor may specify in the Enduring Power of Attorney the type of medical practitioner to make such a medical assessment.

Disclaimer by Attorney

The Donor, whilst mentally capable can revoke the Enduring Power of Attorney at any time. The new Law outlines the requirements to be followed if the Attorney no longer wishes to continue in the role of Attorney. 
If the Donor still has mental capacity then the Attorney can disclaim directly to the Donor to terminate the appointment as Attorney.

If the Donor lacks mental capacity then the Attorney must file the disclaimer with the Family Court together with a report outlining whether, in the opinion of the Attorney, there should be a Property Manager and/or Welfare Guardian appointed for the Donor and the reasons for the Attorney’s opinion.

No Self Benefit

The new changes prohibit the Attorney making payments from the Donor’s assets to the Attorney personally unless such payment falls into a limited category of reimbursement for actual out of pocket expenses incurred. It is possible for the Donor to vary that prohibition by specifying in the Enduring Power of Attorney the extent to which the Attorney should be entitled to be remunerated for the role as Attorney.

Conclusions 

The process for making Enduring Powers of Attorney will now be much more vigorous. The time involved in preparing Enduring Powers of Attorney and giving the appropriate advice will inevitably be greater than previously as result of the stricter requirements legislated.

The role of the Attorney is now more onerous and should not be taken on lightly. Much of the flexibility with the previous approach to Enduring Powers of Attorney has now gone – primarily because some Attorneys abused their positions.

Hopefully, the new process will provide better protection for the Donors at a time in their lives when they may not be able to make decisions for themselves.