A Power of Attorney, in a general sense, is a document that appoints another person or persons to deal with your financial matters or personal matters or both. You are the ‘Principal’ who appoints your Attorneys.

Your Attorney may only act on your behalf while you are alive as their powers cease upon your passing. This means that if you have appointed different people as Executors in your Will, they will deal with your financial matters when you pass away.

You have several options to consider when appointing someone to be your Attorney.

Firstly, you can appoint 1, 2 or even 3 Attorneys. We would not recommend appointing more than 3 Attorneys as decision making can become difficult. We recommend 2 Attorneys or 1 Attorney with a back-up Attorney (called an ‘alternate Attorney’). The alternate Attorney can act on your behalf if something were to happen to your first choice of Attorney.

You must trust the person you appoint implicitly as they will have access to your finances and personal details.

Joint or several?

If you appoint more than 1 Attorney, you may appoint them jointly or severally. If you appoint them jointly, all your Attorneys must agree to any decision made on your behalf. If you appoint them severally, then each Attorney can act on their own on your behalf without the need to consult the other Attorneys for every decision.

Commencement of Powers

You can choose when your Attorney’s powers commence. Most people set the Power to commence at some point in the future, only if they lose capacity themselves. This may occur if you have an accident that affects your brain functioning or if you were to develop dementia.

However, you may also choose to grant the powers to your Attorney immediately upon signing the document. Many elderly people appoint their children immediately if they find it difficult to travel. Their children can then withdraw money from their bank to pay bills or go grocery shopping for their parents.

Financial vs Personal matter

You can appoint your Attorney to only deal with Financial matters or only Personal matters or both. Below are some examples of financial and personal matters that are listed in the Powers of Attorney Act 2014 (Vic) (‘The Act’).

Examples of Financial matters

The following are examples of financial matters—
(a) making money available to the principal for the principal’s personal expenditure;
(b) paying expenses for the principal and any dependants of the principal relating to the maintenance and accommodation of the principal and any dependants
(c) paying any debts of the principal
(d) receiving and recovering money payable to the principal;
(e) carrying on any trade or business of the principal;
(f) performing any contracts entered into by the principal;
(g) discharging any mortgage over the principal’s property;
(h) paying rates, taxes and insurance premiums or other outgoings for the principal’s property;
(i) insuring the principal or the principal’s property;
(j) otherwise preserving or improving the principal’s property;
(k) making investments for the principal;
(m) undertaking any real estate transaction for the principal;
(n) dealing with land for the principal;
(p) withdrawing money from or depositing money into an account of the principal with a financial institution.

Examples of Personal matters

The following are examples of personal matters—
(a) where and with whom the principal lives;
(b) persons with whom the principal associates;
(c) whether the principal works and, if so, the kind and place of work and employer;
(d) whether the principal undertakes education or training, the kind of education or training and the place where it takes place;
(e) daily living issues such as diet and dress.

Duties of Attorneys

Attorneys owe a number of duties to the Principal which are set out in the Act. They also owe a common law duty to the Principal known as a ‘fiduciary duty’. This is because the Attorney is in a position of trust.

Section 63 of the Act states that Attorneys have the following duties:

An attorney under an enduring power of attorney-
(a) must act honestly, diligently and in good faith; and
(b) must exercise reasonable skill and care; and
(c) must not use the position for profit; and
(d) must avoid acting where there is or may be a conflict of interest unless the attorney is authorised by the power, the principal or VCAT; and
(e) must not disclose confidential information gained as the attorney under the power unless authorised by the power or by law; and
(f) must keep accurate records and accounts.

Consequences for breaching duties

To accept their appointment, attorneys must understand these duties and the consequences for breaching them. In serious cases of dishonestly, for example where the Attorney has misused large sums of money, they can be liable to imprisonment.

The Act stipulates that an Attorney must not dishonestly use the enduring power of attorney to obtain a financial advantage or to cause loss to the Principal or another person. Serious breaches carry a maximum of 5 years imprisonment and fines of up to $99,000. The attorney may also be ordered to pay compensation to the Principal.

For further advice regarding Powers of Attorney, please call us on 5032 2711.