Pressure is mounting on the state and territory Attorneys General to commit to reforming the existing state-based Enduring Power of Attorney system, which is currently open to misuse. Attwood Marshall Lawyers Legal Practice Director Jeff Garrett explores the pitfalls of the current system and what should be done to protect those vulnerable people being exploited by its flaws.
Calls have increased for the creation of a national online registration scheme for Power of Attorney documents, which should help close loopholes that are leading to elder abuse.
The Australian Law Reform Commission recommended a national registry in 2017 that could act as a safeguard for older and vulnerable people amid stories of Attorneys and former Attorneys draining bank accounts or selling assets by misusing their role as an attorney. A national register would allow bankers, lawyers, financial and other professionals who process financial transactions and legal documents, to check who the current Power of Attorney is, and turn away anyone who is purporting to be one but has in fact been removed from the position, either through a revocation or an order of a Court or tribunal.
Yet, no real progress has been made on its implementation.
Outgoing Age Discrimination Commissioner the Hon Dr Kay Patterson AO appeared on ABC National Radio on 26 April to urge the state and territory Attorneys-General to commit to fixing the problem, saying that the “dysfunctional” framework is allowing “parasites to seriously harm the health and security of too many older Australians.”
Dr Patterson’s term as Commissioner will be up in three months’ time, and she says that she’s not going to stop campaigning for a national register that would protect older people from the “pariahs” who are taking advantage of the gaps in the system.
At Attwood Marshall Lawyers, we’ve seen Enduring Powers of Attorneys (EPOA’s) misused when adult children feel entitled to access their parent’s assets before they have died. These children have used their parent’s assets for their own benefit, such as transferring funds from their parent’s bank account to pay for their own bills.
This conduct is illegal, and it is also a form of financial elder abuse.
Sadly, when someone appointed as an Attorney misuses their power, it often only comes to light when a third party identifies the red flags. In some cases, no one ever finds out what they have done.
Like the Commissioner, we are extremely disappointed that no progress has been made to implement a national online registration scheme for EPOA documents, in line with the Australian Law Reform Commission’s recommendation in 2017, some 6 years ago.
Appointing a Power of Attorney – a big decision
Everyone understands the importance of writing a Will. However, there is generally a lack of awareness about Power of Attorney and Enduring Power of Attorney documents. They are one of the most powerful documents you can ever put in place and should not be underestimated or signed without proper legal advice from an experienced estate planning lawyer.
An Enduring Power of Attorney document has a unique quality in that it allows the ‘principal’ (the person making the EPOA) to choose someone (or several people) to make financial, lifestyle and health-related decisions on the principal’s behalf should they lose the mental capacity to make decisions for themselves. Sometimes making the operation of the EPOA only after the person loses capacity can be problematical because the person who might be suffering from dementia may not agree with their family and treating doctors – it can be a classic symptom of the dementia itself that the person does not have awareness of their condition. Doctors can also disagree on the level of someone’s lack of capacity which can lead to disputes in Court.
But it is also not always the case that the EPOA comes into operation after you lose mental capacity. In many cases, people decide to make their EPOAs active ‘immediately’, in which case the attorney can act before the person loses capacity completely or if the person has an illness or injury that prevents them form handling their own affairs.
An EPOA is not just a government form to be filled out and witnessed by a Justice of the Peace. It needs to be carefully drafted and, most importantly, the proper protections put in place to protect the vulnerable person. This includes the crucial decision of who should be appointed as the attorney or attorneys and how they will operate – e.g jointly, severally, by majority, successively etc.
Often, older people will appoint an adult child, a niece or nephew or a very close friend when they feel they need help with their legal affairs, but this may not be the wisest decision. Being someone’s attorney is an onerous task and you need some life experience to deal with this, as well as a great deal of patience!
Sometimes it may be appropriate to appoint an independent professional as a co-attorney with a family member to make sure they do the right thing and there are checks and balances set in place. An independent professional can be an accountant, lawyer, financial planner, or a private trustee company (as long as it is NOT the Public Trustee!).
The need for reform
Some older people may not want to report their relatives for wrongdoing, out of shame or embarrassment of being ripped off by those they thought they could trust most.
Some individuals who misuse the EPOA position may not be acting with malice but have misinterpreted their role or have not been fully informed of the rights and wrongs in the first place.
Either way, it is possible to revoke an Attorney if someone is no longer satisfied that the person they originally appointed has their best interests at heart.
Anyone who believes an Attorney is misusing their power can make an application with the support of a suitably qualified lawyer to the Tribunal in their relevant state – such as the Queensland Civil and Administrative Tribunal (QCAT) and the New South Wales Civil and Administrative Tribunal (NCAT) – to have the Attorney removed, and to propose an alternative to take their place.
Appointing a private trustee company as financial manager or administrator can be a beneficial option to avoid the Public Trustee taking control of your affairs or that of loved ones. Click here to find out more about the process.
Without a national register or accessible data source confirming if a Power of Attorney has been revoked, former PoA-holders could use old papers to steal money from older people’s bank accounts, use their assets illegally and falsely sign off on documents.
Each state and territory have different EPOA laws and regulations, making the creation of a national register a complex task – but not impossible. The Federal Government said in the 2018/19 budget that it would pay for the development of a national EPOA register, the Age Discrimination Commissioner said in a statement on her website.
The first step will be harmonising the different legal systems across Australia. At their last meeting in April 2023, the Standing Council of Attorneys-General noted a progress update in relation to EPOA reform projects, but no further information or detailed update was included in the communique.
Importance of avoiding The Public Trustee’s control
Some may be tempted to make a complaint about an EPOA to the Public Guardian, which will then investigate whether the Attorney is acting in good faith or whether they should be struck from the role.
But the Age Discrimination Commissioner said in her ABC interview that she doesn’t want people to have to go through the Public Trustee system. Instead, there should be more education and awareness on the responsibilities of EPOAs and what people’s rights are. We agree.
If an Attorney is found not to be acting in the best interests of the principal, the Public Guardian will apply to the state Tribunal. From there, the Tribunal may appoint the Public Trustee to take over as financial administrator of the person’s affairs.
Unfortunately, we have seen the problems experienced by families and the most vulnerable people in the community when the Public Trustee becomes involved in their lives.
Although the state and territory Public Trustees are supposed to be there to help and protect those most in need, they have a long history of neglect, gross mismanagement, and conflicts of interest, which have been the subject of media attention and several investigations. The public updates on these probes and ongoing reform promises have remained opaque, however.
Attwood Marshall Lawyers – providing trusted advice to ensure your best interests are protected
It is always best to seek advice from an experienced estate planning lawyer in relation to who to appoint as your Attorney, what instructions to include in the document, and when the document should come into effect.
Making an Enduring Power of Attorney, or Appointment of Enduring Guardian (NSW) will give you peace of mind that someone you trust implicitly has your back when you need them most.
When it comes to suspicions (or indeed proof) of misuse of such power, it’s best to consult a lawyer who is experienced in this complex area of law to investigate the matter and help you take action to have the person removed.
To make an appointment with an estate planning lawyer to discuss Enduring Power of Attorney documents and other estate planning tools, contact our Wills and Estates Department, Donna Tolley, on direct line 07 5506 8241, email firstname.lastname@example.org or free call 1800 621 071 anytime.
You can also make an appointment with any of our lawyers by visiting our website and using our online booking app. Our lawyers are available to meet with you at any of our conveniently located offices at Coolangatta, Kingscliff, Robina Town Centre, Southport, Brisbane, Sydney, or Melbourne.