A Power of Attorney is generally appointed to manage a donor’s financial affairs at some point during their lifetime. Typically, this is in the event of the donor’s loss of legal capacity.
The powers given to an attorney typically contain the power for the attorney to do “on my behalf anything that I can lawfully do by an attorney”. There is scope to limit an attorney’s powers in the Power of Attorney document.
In recent years, the scope of the power to “do on my behalf anything that I can lawfully do by an attorney” has come under some court consideration. There are, at general law, some restrictions on an attorney’s powers including the power to act as a trustee. This is consistent with Section 5(4) of the South Australia Powers of Attorney & Agency Act, which states that a general Power of Attorney does not operate to confer authority on an attorney, to perform functions that the donor has, as a trustee or personal representative.
In recent years, courts in various jurisdictions have held that an attorney can act as an appointor of a trust and also act as a personal representative (including as an executor) of a Will in place of an incapacitated donor executor.
In a recent case, the Supreme Court of Queensland found that a Power of Attorney could extend a donor’s superannuation binding death benefit nomination on behalf of a member donor who had lost capacity. The court found the extension of such nomination was a matter relating to the member’s financial affairs, and was not something that needed to be performed by the member personally and was neither a testamentary act nor an act made in the donor’s capacity as trustee. Whilst arguably this decision may be limited to the specific facts of the relevant case and the Queensland Power of Attorney legislation, the potential expanding scope of an attorney’s powers is one that needs to be considered carefully by donors as part of their estate planning.
An attorney that can influence the operations of an existing family trust or extend, change or revoke binding superannuation death benefit nominations could potentially support or frustrate the best laid estate plans. At the very least, it may cause conflict between the attorney and other interested beneficiaries or potential claimants.
Proper thought may now need to be given to appropriate limitations of (or in some cases confirmation of) the powers to be given to an attorney.
It is important to get these things right. Call Donlan Lawyers on (08) 8344 6422 to discuss your options.