What is a Power of Attorney?

Are there different types of Powers of Attorney?

If you have capacity, you have the right to make your own decisions about your life. But in the future, you may get sick or injured and need someone else to make decisions or help you do things. A supportive attorney supports you in making and acting on decisions. A support person appointed under the Medical Treatment Planning and Decisions Act 2016,helps you make and communicate your choices regarding treatment decisions.

An Enduring Power of Attorney, made under the Powers of Attorney Act 2014, is a legal document that lets you appoint an attorney to make certain decisions for you. Their power continues even when you are unable to make decisions. By creating an Enduring Power of Attorney, you can choose who will make important financial and personal decisions for you. You can appoint more than one attorney, and you can appoint attorneys to serve different functions, such as a Financial Power of Attorney. If you do not appoint anyone to be your Enduring Power of Attorney and you lose capacity, the Victorian Civil and Administrative Tribunal (VCAT) can appoint someone to make the decision, such as the Public Advocate or a trustee company.

A Medical Treatment Decision Maker has the legal authority to make medical treatment decisions for you if you cannot do so. An Advance Care Directive enables you to document your values and preferences for your medical treatment decision-maker to consider when making decisions for you. Alternatively, it may include an instructional directive with legally binding instructions about the future medical treatment you consent to or refuse, such as blood transfusions, do not resuscitate directives, organ donation, and so on.

When is a Power of Attorney in effect?

When preparing a Power of Attorney document, you can choose whether you would like the appointment of the attorney and their subsequent powers to take effect immediately upon signing the form or when you lose capacity.

I think someone is misusing or abusing their Power of Attorney. What can I do?

Applications for abuses of powers of attorneys can be made to the Victorian Civil and Administrative Tribunal (VCAT). An application to the Guardianship List of VCAT to consider the person’s attorney may be made by:

  • The principal (the person who made the Enduring Power of Attorney).
  • The nearest relative of the principal.
  • Another attorney under the enduring power of attorney.
  • Anyone who has a special interest in the affairs of the principal.

VCAT may make orders including:

  • About the scope or exercise of an attorney’s power under the enduring power of attorney.
  • Revoking (cancelling) all or part of the enduring power of attorney.
  • About the validity of the enduring power of attorney.
  • Directing the attorney to lodge accounts or other documents with VCAT and have accounts audited.
  • Suspending the enduring power of attorney for a specified period.
  • Ordering the attorney to compensate the principal for a loss caused by the attorney contravening any provision of the Powers of Attorney Act 2014.
  • Revoking the appointment of an attorney.
  • Obligations of the attorney appointed under a Power of Attorney.

The Powers of Attorney Act 2014 came into operation on 1 September 2015. In accordance with the Act, and on confirming acceptance of the role as an attorney, the attorney must ensure that they understand the obligations imposed on an attorney under that legislation and the consequences of failing to comply with those obligations.

Obligation to keep accurate records 

One of the key obligations and responsibilities of a person acting as a power of attorney is to keep proper records of every dealing or transaction conducted under a power of attorney. 

You must keep accurate records and accounts of:

  • all dealings and transactions made for financial matters, and
  • all material dealings and transactions made for personal matters.

There are many ways this can be accomplished – for example, via a spreadsheet or book, and it is recommended that you retain a copy of any receipts. 

If a dispute ever arises, someone acting under a power of attorney can be asked to verify each and every transaction made. This may not be possible without proper record keeping, and you can be ordered to pay back the full amount of any unexplainable transaction.  

Other obligations

Further to the above obligation to keep accurate records, attorneys must also abide by the following obligations:

  • The attorney understands that creating a power of attorney does not mean that the principal cannot continue to make their own decisions about any matter, as long as the principal has appropriate capacity. A person may have the capacity to do some things, but not others – capacity is “document specific”.
  • The attorney must always act in the principal’s best interests (the donor of the power).
  • The attorney is not entitled to any remuneration unless it is specifically authorised in the enduring power of attorney.
  • The attorney must 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).
  • The attorney does not obtain financial advantage for him/her self, or another person.
  • 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 does not delegate powers to another person.
  • In relation to a principal who has diminished decision-making capacity, the attorney must allow the principal to participate in all decisions made to the extent possible. The principal is given all appropriate practical support to enable the principal to participate in decisions.
  • That the attorney does not act where there is a conflict between the interests of the attorney and the interests of the principal
  • 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, making or revoking a power of attorney for the principal, voting 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 they are an insolvent under administration or become 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 a 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.
Penalties

If the attorney contravenes (fails to properly undertake) their duties or obligations under the Powers of Attorney Act and this results in a loss to the principal, the attorney may be ordered by VCAT or the Supreme Court to compensate the principal for the loss.

The attorney can be ordered to pay compensation even if:

  • the attorney is convicted of an offence in relation to the attorney’s contravention
  • the principal has died (in which case compensation is payable to the estate of the principal) and 
  • the enduring power of attorney is invalid or has been revoked (cancelled).

However, if VCAT or the Supreme Court considers that the attorney acted honestly and reasonably and ought fairly to be excused for the contravention, they can relieve the attorney from all or part of the attorney’s personal liability for the contravention. Also, if the attorney acted in compliance with any advice, direction or order of VCAT or the Supreme Court (and the attorney did not knowingly give false or misleading information to VCAT or the Supreme Court), the attorney will not be liable. 

Criminal Offences

An attorney who dishonestly uses the enduring power of attorney to:

  • obtain financial advantage for themselves or for another person or
  • cause loss to the principal or another person

Can be charged with a criminal offence under the Powers of Attorney Act 2014. The attorney found guilty of committing this offence can be sentenced to up to five years imprisonment or fined a maximum of 600 penalty units (more than $88,000). 

If the attorney is a body corporate, the fine can be up to 2400 penalty units (more than $350,000). Where a body corporate has committed this offence, an officer of that body corporate also commits the same offence if the officer failed to exercise due diligence to prevent the commission of the offence by the body corporate.

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