self-managed superannuation fund administrators

New Powers of Attorney Act 2015 – How does this affect you?

 

New Powers of Attorney Act 2015

How does this affect you ?

The new Powers of Attorney Act 2015 came into force on 1st September last and has significantly reformed and consolidated several pieces of legislation relating to the operation of Enduring Powers of Attorney and Guardianship Powers of Attorney. The new Act is designed to address deficiencies in the old legislation and to provide processes for greater scrutiny, control and review of attorney’s decisions by VCAT.

In summary the new legislation provides:

  • detailed outline of the duties of attorneys
  • the creation of a new Supportive Power of Attorney
  • a new qualification on who  is eligible to be an attorney
  • level of capacity required by person to make a new Power of Attorney
  • the ability to detail the scope and operation of a Power of Attorney when a person loses capacity;
  • new forms and more formal requirements for signing documents; and
  • new penalty and compensation provisions for dishonest attorneys .

At Hill legal we have had a number of enquiries from clients and other advisers  about the new legislation. To highlight changes and features of the new legislation compared to the old, we going to explain those features based on frequently asked questions we have received.

 

Frequently asked questions about the new legislation

Q: Is my existing Power of Attorney still valid now that the new legislation is in force?

All existing powers of attorney made up until 1 September last remain in force and are valid. This includes powers of attorney made in other states operating in Victoria, assuming they were valid in the state that they were made. However, there is some doubt whether a person appointed as an attorney under a pre-1st September Power of Attorney such as a  carer or person with  a prior conviction of an offence involving dishonesty which is not disclosed in the Power of Attorney can remain as attorney. This is a feature under the new legislation and it is possible that a person relying on an old Power of Attorney may not recognise that the power is valid.

Q: Who may I appoint as my attorney ?

Following on from the previous question, the new Act limits the people who can Act as an attorney. A person who was under age 18, insolvent, found guilty of an offence involving dishonesty which has not been disclosed in the Power of Attorney or who is a healthcare  provider or care worker are not eligible to be appointed as an attorney for a person referred to as a “principal” . “Care worker” means an individual who performs services for the principal and receives remuneration from any source. This includes a benefit paid by the Commonwealth,  state or territory for providing home care to the individual. This would mean that a child or a relative of a person who is receiving government support as their carer can no longer Act as their attorney or are now ineligible to be that person’s attorney.

Q: if I appoint a person as my Power of Attorney what powers do they have?

The new Act allow the person making the Power of Attorney to define the scope and any limitations on power of the attorney including when the Power of Attorney commences, how decisions are made and when the Power of Attorney comes to an end. You can also give instructions to your attorney as to how you want  your affairs administered if you lose capacity. However, the Act restricts some of the decisions made by an attorney. For example, the attorney cannot make or revoke a will, vote on behalf  of the principal in any state or federal election, consent to the dissolution of any marriage and manage the estate of the principal on the death of that person.

The new Act which combines some of the provisions of the old Guardianship and Administration Act allows you to outline whether the attorney is going to have financial powers and powers “for personal powers”. Essentially this means the power to make decisions relating to your personal or lifestyle affairs such as where you are to live, persons with whom you will associate with, daily living issues such as diet and health care matters. For most people this relates to a power of the attorney to liaise with an aged care provider if you are required to move into an aged care facility because of ill health. If this power is contemplated it needs to be spelt out or identified in the Power of Attorney.

You should also remember when you grant a Power of Attorney  to someone you are giving them the power to do anything that you are lawfully authorised to do and unless the power is limited that person can buy and sell your investments, sell your home if required and access your bank account etc.

Q: Can I appoint more than one attorney?

Yes. The new Act allows for multiple attorneys but you will need to decide how the decisions are made jointly or severally. You will also need to consider if the attorneys have to be unanimous or can make decisions by majority of them or whether you want to consider other deadlock provisions such as the advice of others that the attorneys must be bound by. While you can appoint more than one attorney you can only have one alternate attorney if your other attorney or attorneys are unwilling or unable to Act. This can be remedied however but you will need to have more than one Power of Attorney document.

Q: My health is failing. At what point am I legally not able to make a Power of Attorney?

This question relates to the issue of the mental capacity required to make a Power of Attorney which is spelt out in some detail in the new Act. Basically a person making a Power of Attorney must have “decision making capacity” which means you need to understand the information relevant to the decision to make a Power of Attorney and the effect of the decision and be able to retain that information. You also need to be able to weigh up the pros and cons of making the decision and then to be able to communicate your understanding of this decision by way of speech, gestures or other means.  The Act presumes that you have the capacity to make the decision to enter in a Power of Attorney unless there is evidence to the contrary. The person who witnesses your Power of Attorney must also certify that you entered into the document freely and that you had the required decision-making capacity in making the Power of Attorney.

Q: What happens if I grant a Power of Attorney but I am not incapacitated?

Typically people make a Power of Attorney to cover circumstances where they lose the ability to make decisions. The Act sets out greater protection to a person making a Power of Attorney. For example, if your attorney commences to exercise any power for the first time after you lose decision-making capacity, the attorney must take “reasonable steps to give notice that the attorney is commencing to exercise the power to any person…” The Act also stipulates that if an attorney under an Enduring Power of Attorney has commenced to exercise the power conferred by that document because the principal has lost decision-making capacity, the attorney may continue to exercise a power even if the principal does regain decision-making capacity. The Act also states and affirms that when you give an Enduring Power of Attorney it does not affect your right  to do anything that you are legally authorise or capable of doing. That is, you do not give away any rights by granting a Power of Attorney when you have decision-making capacity.

Q: How does my Power of Attorney end ? How do I terminate a Power of Attorney ?

Ordinarily, your Power of Attorney ceases when you die , when your attorney dies or loses capacity, if they become insolvent, if they become a care worker or if they are ever found guilty of an offence involving dishonesty. Apart from these mandated events terminate the Power of Attorney the Act  allows a process for you to revoke your Power of Attorney but only if you have decision-making capacity. This process is quite formal and requires witnesses to the Notice of Revocation. The Act also allows your attorney to resign from the power granted and there is formal signing and witnessing requirements.

Q: what is the difference between  an Enduring Power of Attorney and a Non-Enduring Power of Attorney ?

As the name suggests an Enduring Power of Attorney continues indefinitely unless the power is limited. A non-Enduring Power of Attorney is the old General Power of Attorney and this document is prepared or circumstance where you have decision-making capacity. It would typically apply, for example, if you are going overseas and you wanted someone to sign a document on your behalf. A non-Enduring Power of Attorney does not require a witness and is therefore not subject to the formal witnessing requirements. The list of persons eligible to be a Power of Attorney remains the same as for enduring powers of attorney. A Non-Enduring Power of Attorney will cease if you lose decision-making capacity.

Q: What is a Supportive  Attorney appointment ?

This is one of the new features of the Act which allows a person to appoint somebody else to make a “support decision”. Basically this allows you to appoint somebody to help you navigate decisions, to access, collect or obtain from or assist you in collecting or obtaining information from another person or to provide information to that person about your affairs. A supportive person can also be given a communication power to communicate information about your affairs that is relevant or necessary to the making of giving effect to a supported decision. The feature of a supportive appointment is that you as the principal are making the decisions and not delegating the decision-making power to the Supportive  Attorney. A perfect example would be someone who‘s health is failing but requires assistance from another person such as a relative to help them navigate the complex issues relating to age care assessment and advice. Again, like a general or Enduring Power of Attorney you can prescribe the supported attorney’s role function and powers and place restrictions on that if required. The persons who are not eligible to be a Supportive  Attorney remain the same as for general or enduring powers of attorney and the power of this nature can be revoked or terminated if it is not expressed to end by certain date.

Q: I have heard of people abusing a Power of Attorney and stealing money, what rights do I if this occurs ?

The new legislation gives greater powers to VCAT to review the decisions of you attorney. The new Act allows compensation orders up to $400,000 and a term of imprisonment of up to five years if the attorney acts dishonestly. The Act also grants of power to seek compensation against the attorney for any financial loss suffered to the principal or where the attorney has obtained a financial advantage for him or herself or another person, limited to a period six months from the date of death of the attorney. VCAT also has the power to review the decisions of the attorney, to revoke the Power of Attorney and to provide an advisory opinion on anything relating to the Power of Attorney or Supportive  Attorney.

If you have any queries regarding the new Act as it applies to your affairs, please do not hesitate to contact our office.

Director

Hill Legal, Lawyers and consultants

September 2015

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