The Powers of Attorney Act 2014 came into force on 1 September 2015, following many years of consideration.
The legislation has three main purposes:
- To clarify & consolidate Victorian laws regarding enduring powers of attorney;
- To create a new role of ‘supportive attorney’ (more on this below); and
- To improve protections against abuses relating to enduring powers of attorney.
One of the first things to note are the changes to the terminology used. Until the changes, those who gave a power of attorney were known as ‘donors’ and those who received them ‘donees’. The giver of the power is now known as the ‘principal’ and the receiver the ‘attorney’.
Enduring powers of attorney continue, or ‘endure’, after the principal’s capacity to make decisions has ended. ‘General’ powers of attorney do not continue to operate if the principal loses capacity. To more clearly reflect this distinction, ‘general powers of attorney’ are now known as ‘general non-enduring powers of attorney’.
There will also be fewer documents. The ‘enduring power of attorney’ (which relates to financial matters) and the ‘enduring power of guardianship’ (which concerns itself with ‘lifestyle’ or personal matters) have been consolidated into one document – an enduring power of attorney which will cover management of both financial and personal matters. The enduring power of attorney (medical treatment) remains unchanged.
A new category of power of attorney has been introduced - a ‘supportive attorney’.
In the general non-enduring powers and the enduring powers noted earlier the attorney makes decisions on behalf of the principal. A supportive attorney does not make decisions on behalf of a principal. The principal makes decisions and the supportive attorney assists or supports the principal in making those decisions.
A supportive power of attorney is not enduring. That is, it does not have effect for any period after its making during which the principal does not have decision making capacity for the matters to which the supportive attorney appointment applies (section 102). Although well intentioned, difficulties can be foreseen with this. For instance, if a supportive attorney is the only appointment and the principal subsequently loses capacity (and does not regain it) the supportive attorney can no longer act – due to loss of capacity - and the principal cannot therefore appoint a new attorney.
A supportive attorney cannot act for their principal in a ‘significant financial transaction’. Such a transaction would include:
(a) making or continuing an investment (with the limited exception of ‘investing or continuing an investment of an amount of $10,000 or less in total in one or more interest bearing accounts of an authorised deposit-taking institution’);
(b) undertaking any real estate transaction for the principal (with the exception of entering into a residential tenancy for premises in which the principal lives or intends to live);
(c) dealing with land on behalf of the principal, including taking out a loan on behalf of the principal or giving a guarantee on behalf of the principal;
(d) undertaking a transaction for the principal involving the use of the principal’s property as security for an obligation; or
(e) buying and selling substantial personal property on behalf of the principal.
Duties & Liability of Attorneys
The changes clearly sets out duties of attorneys. These include:
- acting honestly, diligently and in good faith
- exercising reasonable skill and care
- not acting where there is or may be a conflict of interest unless the power of attorney authorises this
- keeping accurate records
There are special provisions relating to gifts (section 67). An attorney under an enduring power of attorney is not entitled to any remuneration unless the power specifically authorises it or it is otherwise authorised by law (section 70).
New provisions have also been added to provide for compensation. VCAT or the Supreme Court may order an attorney under an enduring power of attorney to compensate the principal for a loss caused by the attorney contravening provisions of the Act (section 77).
Transitional Provisions for Existing Powers of Attorney
nder section 142 of the new Act, ‘old’ enduring powers of attorney made before 1 September 2015 will remain valid. Some sections of the new legislation (e.g. provisions relating to liability of attorneys) will apply to existing powers of attorney.