Thinking | 18 August 2015
Powers of Attorney – Major changes ahead
Victorian power of attorney legislation is set for a major shakeup from 1 September 2015, with the introduction of the Powers of Attorney Act 2014 (Act). There are a number of changes introduced under the Act, including tightening up witnessing requirements and the introduction of penalties of up to five years imprisonment and over $90,000 for misuse of enduring powers of attorney. We see five key areas under these new laws.
Click here to watch our 2 minute video on the changes.
1. Financial and personal decisions
Under the current laws:
an enduring power of attorney (financial) authorises legal and financial decisions; and
an appointment of enduring guardian authorises care and lifestyle decisions.
The Act introduces an ‘enduring power of attorney’ (EPOA) which allows a principal (the person giving the power) to appoint attorneys to make decisions in relation to financial matters and personal matters under the same document. The same people or different people can be appointed for these decisions, and alternatives can also be appointed.
2. Witnessing requirements
The witnessing requirements have also been altered for an EPOA:
one of the two witnesses to the principal’s signature must either be a medical practitioner or authorised to take affidavits (previously this was statutory declarations); and
none of the witnesses can be related to the principal or attorney, or be a carer or accommodation provider for the principal.
3. Conflict transactions
The notion of a ‘conflict transaction’ is introduced, which prevents an attorney entering into a transaction that is or may cause conflict between:
the duty of the attorney to the principal; and
the interests of attorney, or their relative, business associate or close friend.
Helpfully a number of transactions are carved out, including transactions for the benefit of dependants of the principal, and gifts of a seasonal nature (such as birthdays or Christmas).
4. Supportive attorney
obtain information to assist the principal in making their decisions;
communicate particular information on behalf of the principal; and
take the steps necessary to give effect to decisions of the principal.
One driver of changes under the Act was concerns about elder abuse and breaches by an attorney. Tough penalty regimes have now been introduced including:
VCAT / Supreme Court now having power to make a compensation order against an attorney; and
up to five years imprisonment or up to 600 penalty units (currently $91,002) where a person dishonestly obtain, revokes or uses an EPOA.
While there are significant changes under the Act, it does preserve existing enduring powers of attorney (financial) and appointments of enduring guardians. Further, enduring powers of attorney (medical treatment) remain in their current form.
These changes provide a good opportunity to review and update powers of attorney where necessary, and also to take advantage of the new options available under the Act.