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Powers of Attorney: the finer points you may not know

Succession Law News | April 2016

What is a Power of Attorney?

A Power of Attorney is a document provided by a Principal (the person granting the Power) to an Attorney granting the Attorney the power to act the Principal’s personal representative in matters relating to money (bank accounts and monetary transactions), property (contracts for the sale and purchase of land, leases, mortgages) and other legal documents concerning money and property.

How long can a Power of Attorney last?

The Power of Attorney document is a prescribed form that Forum Law is able to prepare and about which we can provide assistance and advice. A Power of Attorney can be temporary (e.g. to apply if you are travelling overseas or other temporary absence) or more permanent, and can be as broad or restrictive as you wish.

Properly register your Power of Attorney

In order to have the Power of Attorney apply to land transactions, the document must be appropriately prepared and executed and registered at the Department of Lands. Forum Law advises all clients to register their Power of Attorney to ensure that the record of the document is on the public register and able to be checked and identified by banks and other authorities. Further, if the Power of Attorney is registered, then the process of removing or altering the Power is straight forward and certain. Where you have a registered Power of Attorney you only need to register a “Revocation” to remove or change an Attorney. If you have not registered the Power of Attorney the process of removing or changing an Attorney relies on the process of sending a letter to the outgoing Attorney. As a consequence, the outgoing Attorney may elect to be “difficult” and not honour the intentions of the Principal and continue to present the Power of Attorney document to third parties, until they are “caught out”. If you do have a Power of Attorney that if not registered, it can be registered at any time. If you do not have a registered Power of Attorney and you wish to revoke it, then ensure that you not only notify the outgoing Attorney of your wishes, but also your banks and other third parties who may be relying on your Power of Attorney in the absence of a registered “Revocation”.

Enduring Power of Attorney

If you wish to have your Power of Attorney apply to cases where you may have “lost capacity through unsoundness of mind” you must have the Power of Attorney executed before a solicitor or other prescribed witness, who must provide a certificate. This type of Power of Attorney is referred to as an “Enduring Power of Attorney” and is an important consideration if you anticipate possible temporary or more permanent loss of mental capacity in cases of a significant medical procedure, aging with dementia or a physical incident involving a high risk of accident. If your Power of Attorney does not have this certificate attached then it will not apply to cases where the Principal has lost mental capacity.

The consequences of not having a Power of Attorney may involve the appointment of the Public Trustee and Guardian or the Office of the Protective Commissioner to manage the financial affairs of the Principal. These appointees charge a commission and fee and once appointed are difficult to replace.

Duties of an Attorney

Once appointed, the duties of the Attorney are to carefully manage the finances and property of the Principal. Primarily the Attorney must:

  • quarantine the finances and property of the Principal in accounts and places which are completely separate from those of the Attorney, and
  • keep clear and accurate records of all financial transactions and property dealings of the Principal.

If this duty is not properly observed then the Attorney may be on the receiving end of a claim by the Principal, or even the beneficiaries or executors of a deceased estate if the Principal subsequently dies. The recent court decision of Cohen v Cohen [2016] NSWSC 336 is a timely reminder of the duties of an Attorney not to misuse their power by benefitting themselves contrary to the stated power in the Power of Attorney document. In this case the Attorney transferred the Principal’s land to himself, which was contrary to the power. The court ordered the Attorney to return the property to the Principal.

Contact Forum Law, solicitors in Sydney’s inner west area of Leichhardt, to discuss any questions or concerns you may have about making a Power of Attorney or changing one, or what your duties are if you are an Attorney.

Call us on 02 9560 3388 for an obligation-free 30-minute consultation.

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.