CHOOSE YOUR ATTORNEY CAREFULLY
ENDURING POWERS OF ATTORNEY: BE CAREFUL HOW YOU TREAD
CHOOSING AN ATTORNEY
If you (called the principal, or the donor) lose capacity your attorney has enormous power to deal with your affairs.
HOW ATTORNEYS ARE SUPPOSED TO ACT
These powers are constrained by legislation which specifies how these powers are to be used.
In summary:
The attorney must exercise their powers to protect and benefit the principal’s interest and not their own.
They must keep the principal’s finances and their own separate and they must be able to account for how they have used the principal’s assets.
They must not give gifts or confer a benefit on themselves or someone else unless expressly authorised to do so by the power of attorney.
The principal when completing the Enduring Power of Attorney form can place conditions on how the attorney is to act.
SOMETIMES THOSE WITH POWER OF ATTORNEY ABUSE THEIR POWERS: ELDER ABUSE
Smith v Smith [2017] NSWSC demonstrated that even when the principal has done everything they can to direct the way the attorney acts, it doesn't always end up well.
Mr Smith had not given Mrs Smith the authority to give gifts or to confer benefits on the herself or on others. Nonetheless when Mr Smith lost capacity and was placed in a nursing home, Mrs Smith “rushed, headlong, into the cash economy, liquidating all property owned by the Mr Smith (including his share portfolio which he had left to his children from a previous marriage) .. dissipating his property as if entitled to do so in disregard of his interests”.
Mrs Smith used her husband’s money to fund the purchase of a residence in the names of her daughter by an earlier marriage and the daughter’s husband and, a little later, funded the construction of a granny flat for herself on that property. This all despite the fact that, in the will, she was still to receive the defendant’s residence, car and proceeds of a bank account.
Mr Smith’s children did take her to court but were able to recoup only a nominal amount of the property she had misappropriated.
WHAT CAN PRINCIPALS LEARN FROM CASES SUCH AS THIS?
Considerations:
make sure you have an attorney you feel you can trust (Mr Smith did trust Mrs Smith!) and perhaps appoint more than one attorney so they can keep a check on one another
make sure potential attorneys understand their duties thoroughly before they accept the role and
make sure they understand that there are potential civil and criminal penalties if they do not obey their duties to the principal.