Protecting Against Misuse of Powers of Attorney

It is generally accepted that legal tools, such as an Enduring Power of Attorney, are generally hoped to be able to help people in their daily lives. However, like so many things, there is a possibility that an otherwise benign legal document can be used to inflict a great deal of harm on vulnerable members of society. As reported in a recent article in the Sydney Morning Herald (available here), an inquiry by the Royal Commission into the issue of elder abuse in Australia has highlighted how Powers of Attorney can be abused by unscrupulous individuals. 

At Szabo & Associates, Solicitors our specialist team of lawyers believe that it is vital that people understand the legal consequences of agreeing to and entering into an Enduring Power of Attorney. In this blog post, we review the established law and point out key considerations for people who are thinking about using them.

Can a Power of Attorney Be Used for Questionable Purposes?

In its review of the issue of elder abuse, the Royal Commission was told of one particular case concerning an elderly gentleman and his experience of a Power of Attorney. While grieving for the loss of his wife, he granted his son Power of Attorney in order to deal with his affairs. His son is reported to have sold his father’s home in New South Wales and moved him into more modest accommodation to be closer to his family.

Although there was no evidence that the gentleman was unhappy about leaving the property, it was reported that his daughter-in-law was verbally abusive towards him and regularly threatened him with physical violence, and that his son apparently refused to participate in mediation. The elderly gentleman’s home was reported to have sold for $470,000 but he has no knowledge of where this money has gone, nor does he have the means to move elsewhere. In its evidence to the Commission, the NSW Elder Abuse Helpline and Resource Unit reported that the gentlemen refused to leave for fear of losing contact with his grandchildren and family dogs, despite regularly having called the helpline in the previous year.

The details of this gentlemen have not been published, but his story does raise an important issue: how can you guarantee that the people you grant power to manage your affairs will do so with your best interests in mind?

Back to Basics: What is a Power of Attorney?

Before there can be any mention on the merits of using an Enduring Power of Attorney, it is important to understand what it is. An ‘attorney’ is someone that you choose to take control over your assets and/ or finances at a point in time when you are no longer able to manage your affairs independently. An ‘Enduring Power of Attorney’ is the legal instrument that grants the person you choose with the authority to do the things that you have agreed to within the body of the deed.

A Power of Attorney can be used in a variety of circumstances. It is not uncommon that if someone is highly mobile in their job and often away from home, e.g. travels internationally for extended periods of time, that they will enter into a Power of Attorney so that their affairs can be handled while they are away. It is, however, more common for a Power of Attorney to be used by people in anticipation of a time, e.g. through advancing age or in an attempt to pre-empt any severe illness, when they are no longer able to do the things that they would otherwise do themselves. These tend to be things that we, while young and able, take for granted: signing documents; paying bills; housekeeping; and simply being able to take care of ourselves.

Unfortunately, the time may come where we are no longer able to manage matters without some help. It can be very important to have someone to help you if you perhaps need specialist medical attention, or simply cannot manage everyday tasks without some assistance.

Jumping the Gun: Why enter into a Power of Attorney before it is needed?

Entering into an Enduring Power of Attorney is based on your ability to understand the consequences of, and communicate your intention, to enter into an Enduring Power of Attorney. If you are struck by a severe illness, or some other accident that otherwise affects your ability to communicate etc., then you will no longer be able to enter into a Power of Attorney. The idea of entering into an Enduring Power of Attorney is to ‘plan ahead’ in case anything happens that would warrant the creation of an Enduring Power of Attorney, at which point you would be incapable of creating one.

A Power of Attorney that is created to pre-empt any possible unsoundness of mind on your part, sometimes described as an ‘Enduring Power of Attorney’, can be tailored to come into effect at a time that you decide. This is another useful feature in that you have complete control over when your affairs will be managed by other people. It is important to understand that the decision of who is to be your attorney is also your choice. This relates to the point mentioned in the article above, in that you must be very careful in selecting the person to act as your Attorney. You should never be rushed into entering into a Power of Attorney, and should have a full and frank discussion with your intended candidate of how you wish to lead your life should you become incapable of managing your own affairs.

Get Help from the Experts: Speak to Szabo & Associates, Solicitors

No one should suffer ill-treatment as a result of having granted a Power of Attorney. While they are not themselves capable of inflicting harm on you, a Power of Attorney can be abused by people who are ill-suited to acting in your best interests.

At Szabo & Associates, Solicitors we are anxious that any client considering entering into a Power of Attorney meets with us for a full discussion on what it would mean for their lives. We also are adamant that you take all of the time that you need in deciding who you wish to act as your Attorney: we will discuss the various options open to you in order to ensure that your interests are catered for. If you would like to speak to one of our team about an Enduring Power of Attorney, or perhaps have questions about what the process involves, please contact George Szabo today.