Acting as an attorney can be complex, risky and a thankless job. Attorneys take on significant responsibility, and often don’t seek advice about their responsibilities when they sign-on to accept the role. Making impactful decisions on behalf of another person can be daunting and can give rise to personal liability if things go wrong or if there is a dispute among interested parties.
Back to basics
The person who appoints an attorney to act on their behalf via an Enduring Power of Attorney (‘EPA’) is known as ‘the principal’.
Before acting as a principal’s attorney, the EPA document should be carefully reviewed. It will identify who is appointed as attorney, set out the circumstances when they may act, and may impose conditions or limitations on the actions that can be taken.
Attorneys are regularly required to account for their conduct and the transactions they have entered on behalf of the principal. Accordingly, it is strongly recommended that attorneys obtain their own advice and ensure they keep detailed records and accounts of what they do in that capacity.
Can I act while my principal has capacity?
If the principal has decision-making capacity, an attorney cannot act on their behalf unless the EPA document expressly states that the appointment commences immediately.
Often appointments that commence immediately are done for reasons of convenience rather than necessity. But, even if a principal with decision-making capacity gives an attorney an express direction to perform a task or transaction on their behalf, an attorney is still bound to act in accordance with their legal responsibilities and duties enshrined in law.
It is important to remember that, whilst a principal may have capacity at the time, disputes often arise after the principal has lost capacity or passed away and they cannot then ‘vouch’ for the decisions made. There can also be disputes about when decision-making capacity was lost for relevant decisions and when the attorney assumed responsibilities under the document.
Acting when the principal has lost their decision-making capacity
An Enduring Power of Attorney will authorise the attorney/s to act when the principal no longer has decision-making capacity – that is the enduring nature of the power.
Decision-making capacity is a legal definition; it is decision specific and is a fluid construct. Detailed evidence of the loss of decision-making capacity should be obtained from appropriate medical practitioners and attorneys should seek legal advice when this occurs. It is important to clarify what decisions the principal has lost decision-making capacity to make and what decisions they can continue to make, either autonomously, or with support.
I have evidence that my principal has lost capacity and I am an attorney – am I the correct person to use the principal’s powers?
If the principal has appointed a single attorney, that attorney will usually be the proper person to act. Commonly, a principal will appoint multiple attorneys, who may be authorised to act jointly only, jointly and severally, and/or as alternative attorney/s where the primary attorney is unable or unwilling to act.
Joint attorneys must act together; meaning they must agree on each decision and all sign any relevant documents. If there are joint and several attorneys, any one of them may make a decision or sign a document. Where a person is appointed as an alternative attorney, they will only be authorised to act if the superiorly appointed attorneys are unable, unwilling, or no longer authorised to act.
Can I sell the family home?
Selling a family home may attract scrutiny and, even if done at the direction of the principal, should not be done without advice.
If there are no conditions or limitations in the EPA that affect the sale of the principal’s property, an attorney must then consider whether the sale accords with their responsibilities and duties as an attorney under the document and under the Powers of Attorney Act (Vic) 2014.
An attorney must:
- Give all practicable and appropriate support to the principal’s wishes.
- Encourage the principal to participate in decision-making, even if they lack decision—making capacity.
- Act in a way that promotes the principal’s personal and social wellbeing; inclusive of recognising their inherent dignity, their existing relationships and values, and respecting their confidential information.
- In some circumstances, have regard for the principal’s dependants and the terms of the principal’s Will.
Any attorney in this position should ask themselves (and other knowledgeable persons and advisors):
- What are the principal’s wishes?
- Will the sale promote the principal’s personal and social wellbeing (including financial wellbeing)?
- Do I have any personal interest in the sale that conflicts with my obligations as attorney?
- What other professional advice should I obtain (e.g. financial advice or tax advice)?
- Does anyone else have any potential legal and/or equitable interest in the property?
- Would selling the property alter the outcome of the principal’s Will?
- Is it necessary to sell the property to achieve the desired outcome for the principal, or are there any other solutions?
- How can I protect myself from claims ‘down the track’ arising out of my conduct as an attorney?
When considering whether to take any significant action, obtaining legal advice will always be prudent. Where there is doubt about what the right decision is, an attorney can also seek advice from the VCAT about what to do, which can protect them from liability if the decision is disputed.
How we can help
Our team at Moores have specialist knowledge in the areas of Powers of Attorney, guardianship and administration, and applications in the VCAT and the Supreme Court of Victoria, including in relation to issues of elder financial abuse. We would be pleased to discuss any proposed or concerning actions taken by any person in their capacity as an attorney.
Contact us
Please contact us for more detailed and tailored help.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.