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Whitehead, Peter --- "Powers of Attorney Reform in NSW" [2004] ElderLawRw 3; (2004) 3 Elder Law Review 4

POWERS OF ATTORNEY REFORM IN NSW

PETER WHITEHEAD[1]

The Powers of Attorney Act 2003 (NSW) commenced on 16 February 2004. The Act provides timely law reform to an important area of elder law.

The proposals for law reform were developed by a NSW Government committee with representatives from Land and Property Information, Attorney General’s Department, Guardianship Tribunal, Office of the Protective Commissioner, the then Department of Aging and Disability and the Public Trustee.

A Green Paper was circulated to many community and professional organisations and the proposals met with virtually unanimous support. There was a clear message that reform was required. This was not surprising as our aging population is creating the need for increased supported decision making, in particular in financial management.

The Act is a response by Government to meet this need and provides a solid basis for lawyers, families and professional financial managers to provide better services to those requiring a power of attorney for life management.

A Key Changes

1 Benefits For Attorney

The statutory short form of a power of attorney provides that a donor can authorise benefits to an attorney for:

reasonable living and medical expenses, and
all other benefits.

The Act defines this to mean housing, food, education, transportation, medical care and medication. All the circumstances, in particular the donor’s financial circumstances and assets, have to be taken into account in arriving at reasonable benefits.

As to the second category, the common law will still apply, requiring ‘unambiguous and irresistible’ language to define the benefits.

The reform recognises that an attorney can be dependent on the donor and allows them to include a simple statement that provides a minimum, or safety net, for the well being of the attorney. It overcomes the previous uncertainty.

The reform ensures that the donor turns his or her mind to what he or she really wants and gives effect to these intentions.

2 Benefits For Third Parties

The statutory short form of power of attorney also allows the attorney to expressly authorise the use of the donor’s funds to benefit third parties for reasonable living and medical expenses. Regard must be had to all the circumstances in particular the donor’s financial circumstances and assets.

Like the proposal in relation to attorneys taking benefits, the main advantage of this change is that it removes uncertainty. It also allows the donor to include a simple statement that provides a minimum level of benefits to cover the well being of a third party, most probably a dependant.

3 Gift Giving By The Attorney

Gift giving by the attorney enables the donor to continue to be involved in what is a normal and important part of family life.

The following gifts can be specifically authorised by the short form:

reasonable gifts that are given seasonally or occasionally to those who are a close friend or relative of the principal, and
donations limited to those of a nature that the principal made when capable or might reasonably be expected to make

both having regard to all the circumstances in particular the principal’s financial circumstances and assets.

4 Specific Gifts In A Will

Section 22 of the Act brings dealings by attorneys of enduring powers of attorney into line with similar dealings by Financial Managers under the Protected Estates Act: if an attorney has disposed of property specifically given in a Will, the named beneficiaries will retain the same interest in surplus money or other property arising from the disposition as they would have had if the property had not been disposed of.

The Court has been given the power to make orders and directions to vary the operation of those provisions where it is considered their operation would result in the ‘named’ beneficiaries either gaining an unjust and disproportionate advantage or suffering an unjust or disproportionate disadvantage of the kind not contemplated by the principal’s Will.

As well, the Act provides for an adjustment of entitlement in intestate estates when an attorney has disposed of the matrimonial home and this has affected the spouse’s right to elect to retain the home as part of the statutory entitlement.

5 Commencement Of Powers Of Attorney And Attorney’s Acceptance

The prescribed form of power of attorney itself gives the donor an ‘options list’: the power can operate immediately, when the attorney accepts the appointment, between certain specified dates, ‘when my attorney considers that I need assistance managing my affairs’ or ‘other’. The choice is, of course, for the donor to make and advice will be required before this choice is made.

An enduring power of attorney now does not confer any authority on an attorney until the attorney accepts the appointment by signing the power of attorney document itself. The acceptance does not need to be witnessed. Such acceptance can be contemporaneously with, or at any time after, the execution by the donor. If more than one attorney is appointed, authority to act is only conferred on that attorney or those attorneys who have accepted appointment.

The prescribed form stipulates that in the event of no option being selected or unclear or inconsistent options, the power operates immediately or, in the case of an enduring power, when the attorney accepts.

6 Information For Principals And Attorneys

The new prescribed form itself gives brief information on:

The importance of a power of attorney and the desirability of seeking legal advice prior to execution;
An attorney’s powers
The fact that it is not to be used after the principal’s death;
Health and lifestyle decisions being made by Guardians and not attorneys (and giving points of contact);
The need to delete clauses relating to gifts and benefits should the donor not wish to confer authority on the attorney in respect of these;
The attorney’s responsibility to always act in the best interest of the donor and the necessity to keep the attorney’s own money and property separate from that of the principal and to keep accounts and records;
The need to enquire whether other States and Territories will recognise the document;
The need to register the document for dealings with real estate; and
Points of contact for information generally – LPINSW (it is intended that this office will publish a fact sheet), a solicitor, a trustee company or the Public Trustee.

7 Tribunal To Deal With Enduring Powers Of Attorney

The Act gives wide powers to the Guardianship Tribunal.

Applications to the Tribunal can be made in less time and at less cost than similar applications to the Supreme Court.

The Tribunal has powers to make orders as to the mental capacity of the principal to make a valid power of attorney and to declare a power of attorney to be invalid for reasons of incapacity, non-compliance with other legislative requirements or because of dishonesty or undue influence or other reasons.

The Tribunal now has wide-ranging powers to make orders if satisfied such orders would be in the best interests of the donor or would better reflect their wishes. These orders could include: varying the terms of a power; removal of an attorney; appointing a substitute attorney for one who has been removed or has vacated office; reinstating a lapsed power of attorney; requiring furnishing of accounts and information; requiring auditing of accounts; requiring submission of a plan of financial management for approval; or revoking a power of attorney.

Attorneys acting under enduring powers of attorney are able to apply for a declaration that a donor lacks or lacked capacity because of mental incapacity at a specified time or during a specified period or for the time being.

Such a declaration would also go toward preventing financial exploitation of a donor by giving exclusive management of the donor’s financial affairs to the attorney. For example, banks or other financial institutions could be advised of these declarations and would have a legal basis for declining to release funds to persons other than the attorney (including the donor).

8 Recognition Of Enduring Powers Of Attorney Made In Other States And Territories

The Act gives recognition in New South Wales to enduring powers of attorney executed in accordance with the legal requirements of another State or Territory. However, this is limited to any power that could be conferred in New South Wales, and subject to any limitation on the power imposed by the law in the State of execution.

B Conclusion

The reform creates opportunities for members of the community and their advisers to obtain fresh insight into the issues arising out of financial management through a power of attorney. With proper advice and due consideration of a variety of options, both donors and attorneys, will be able to better plan for and manage an important aspect of life.


[1] Public Trustee, NSW

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