What to do if you are concerned about the improper use of an enduring power of attorney?
An Enduring Power of Attorney (EPOA) is one of the most important legal documents a person can put in place and unfortunately, one of the most susceptible to misuse. When an attorney abuses their position, the consequences for the principal can be devastating. Knowing when and how to act is critical.
What Legal Obligations Does an Attorney Have Under an EPOA?
Under the Powers of Attorney Act 2014 (Vic), an attorney appointed under an EPOA has strict legal obligations, including to:
- Act honestly, diligently, and in good faith;
- Act in the principal’s best interests;
- Keep the principal’s finances entirely separate from their own;
- Not make gifts beyond limited allowances expressly permitted by the Act;
- Not benefit themselves except as expressly authorised in the EPOA document; and
- Maintaining records of transactions and being able to account for all dealings.
These obligations exist regardless of whether the principal still has capacity. An attorney who uses a power of attorney for their own benefit or without authorisation, may be liable to court proceedings.
What Are the Warning Signs of Power of Attorney Misuse?
Concerns about misuse should be taken seriously if any of the following are observed:
- Large or unexplained withdrawals from the principal’s bank accounts;
- Transfers of property or assets to the attorney or their family members;
- The principal being isolated from other family members or support networks;
- Bills, rates or medical expenses going unpaid despite the principal having assets;
- The attorney refusing to provide information about the management of the principal’s affairs;
- Changes to investment portfolios, property ownership or other assets that the principal has not consented to or is unaware of; or
- The attorney making decisions that clearly do not reflect the principal’s wishes or best interests.
WHEN Should You Act on Your Concerns?
You should act promptly if you have reasonable grounds for concern. Time matters because assets can be dissipated quickly.
If the Principal Still Has Capacity
If the principal still has capacity, they can revoke the EPOA by completing a formal revocation document, notifying the attorney in writing, and informing all third parties (banks, the ATO, Centrelink) who hold copies. Revoking the power and appointing a new attorney may be the simplest and most effective solution.
If the Principal Has Lost Capacity
However, if the principal has lost capacity, the options are more limited but still substantial. An application can be made to the Victorian Civil and Administrative Tribunal (VCAT) to:
- Order the attorney to produce accounts and submit to an audit of all dealings with the principal’s finances;
- Suspend or revoke the attorney’s appointment;
- Impose a freezing order restricting access to and use of bank accounts where fraud or misappropriation is alleged;
- Order the attorney to compensate the principal for any losses caused (section 77 of the Powers of Attorney Act 2014 allows VCAT to make a compensation order without the need for separate enforcement proceedings in other courts); or
- An application can also be made requesting that the Office of the Public Advocate investigate the matter.
SO WHAT PRACTICAL STEPS SHOULD YOU TAKE?
Depending on the urgency and severity, consider:
- If the principal has capacity, seek assistance from an Estate planning lawyer to revoke the EPOA immediately and obtain new Estate planning advice;
- Contact the relevant financial institutions to flag the concern and request a hold on transactions;
- Seek legal advice to assess whether VCAT intervention is needed;
- If criminal conduct is suspected (fraud, theft), make a complaint to Victoria Police; or
- Contact the Office of the Public Advocate (OPA) for guidance as it can investigate elder abuse matters and assist vulnerable people who lack capacity.
Early intervention is critical. The longer misuse is left unaddressed, the more difficult and expensive recovery becomes.
If you have concerns about the misuse of an EPOA by an Attorney, our Wills, Trusts, and Estates team can assist you with guiding you through your options.
