As Australia’s aging population continues to rapidly expand, more and more people are asking their loved ones to be their Power of Attorney when they are incapable of managing their own affairs.

By and large this arrangement works and is a great solution however the potential exists for  the Power of Attorney to abuse their position and take advantage of the person whose affairs they manage.

What is a Power of Attorney?

 The main types of Powers of Attorney are:

  • Enduring Power of Attorney (financial) – the Power of Attorney manages your property, financial and legal affairs.
  • Enduring Power of Attorney (medical) – the Power of Attorney makes medical decisions regarding you on your behalf.

This article focuses on the Enduring Power of Attorney (financial).

What are the duties of the Power of Attorney?

The duty of the Power of Attorney is to act in the best interest of the person whose affairs they manage. They need to keep records of the financial transactions entered into and keep their own property and interests separate to that of the person whose affairs they manage.

What are some examples of a Power of Attorney breaching their duties?

 Unfortunately, sometimes a Power of Attorney treats the funds of the person for whom they manage the affairs as their own. The Power of Attorney may breach their duties by paying for their own expenses, living in the person’s house rent free whilst the person is care, taking out risky investments (such as in their own business) and giving themselves gifts.

 What can I do if I believe that the Power of Attorney is not administering my close relative’s finances properly?

 The steps you may take are as follows:

  1. Write to the Power of Attorney expressing your concerns and asking them to provide you with an accounting for the transactions they entered into.
  2. If they refuse, make an application to VCAT outlining your concerns and seeking an order that the Power of Attorney:
    • outline the financial position of the person’s affairs they manage; and
    • outline all of their transactions in their capacity as Power of Attorney (including supporting documents).
  3. If these documents reveal that the funds have been abused, then seek an order from VCAT that an alternative Power of Attorney be appointed who can manage the affairs properly and possibly seek repayment of funds from the former Power of Attorney.

If you believe that your loved one’s Power of Attorney is abusing their position, it is important to act. In order to ensure that you have sufficient evidence and bring the correct proceeding it is advisable to consult a lawyer.

If you have any further queries, please contact Catherine Ballanytne at Catherine.Ballantyne@madgwicks.com.au or on (03) 9242 4766