The Power of Attorney is a legal status authorising an agent to make decisions on behalf of the principal in regard to matters relating to the principal’s welfare and/or administration of his/her finances. According to section 66 of the Powers of Attorney Act 1998 (Qld), an attorney must exercise his/her power honestly and with reasonable diligence to protect the interests of the principal.
Unfortunately, on some occasions, attorneys take advantage of their power and distribute the principal’s assets and sell property for their own pecuniary benefit. There are a number of ways and useful tips which will help to protect a principal from power of attorney abuse. They are briefly explained below.
LIMITING THE SCOPE OF POWER
In order not be victimised by the attorney’s abuse of his/her power, the principal can expressly limit the scope of this power when drafting a power of attorney document. For example, the language of the document might express that the attorney cannot make decisions regarding real estate or investments.
APPOINTING A CO-ATTORNEY
The principal can appoint more than one person to exercise power of attorney in different capacities (to act jointly/severally or as a majority). The arrangement of this type will ensure that the balance of power is observed for the power of attorney not to be taken an advantage of. Note that it is generally advisable to appoint at least two attorneys acting jointly.
REVOCATION OF THE POWER OF ATTORNEY
The power of attorney can be revoked by the principal under the Division 2 of the Powers of Attorney Act 1998 (Qld). The principal must take reasonable steps to advise all the attorneys affected by this revocation (s 16(a)). If there are several attorneys appointed, the revocation can be done regarding the powers of only one of them, while the powers of others would not be affected. The principal must also ensure that the revoked power of attorney is de-registered in the power of attorney register (s 16(b)).
APPOINTMENT OF A GUARDIAN
For general (non-enduring) powers of attorney, if principal becomes a person with impaired capacity, then the power of attorney is revoked (s 18(1)), unless the court decides that the power of attorney should remain in force for the benefit of the principal (s 18(2)). However, such an impaired principal cannot himself/herself revoke the power of attorney. In these circumstances another person can make an application for an appointment of a guardian (Form 10 – Application for administration/guardianship appointment or review) to exercise guardianship over the victim of the power of attorney abuse.
One major consideration is not leaving it too late for making a power of attorney, especially an enduring power of attorney (EPA). We recommend taking legal advice early, as part of normal family and estate planning.