How To Avoid Power Of Attorney Pitfalls
A NSW parliamentary inquiry was recently told of increasing problems with elderly people granting power of attorney to young relatives who become impatient with getting their hands on what they consider to be their inheritance.
A university expert in elder law said the relatives might not consider it stealing or an abuse of their power of attorney to “borrow” $10,000 from the estate they are administering to renovate their bathroom, but it is.
They might consider it to be just improving a property they will inherit someday anyway. But what about the elderly person they are supposed to be protecting as their power of attorney? What if they later need that money for medical care or nursing home bills.
The parliamentary inquiry is examining proposals for attorneys to lodge yearly accounts and the establishment of a register of people having power of attorney to provide some basic oversight of the estate management of the booming number of elderly Australians.
Joshua Crowther, a Law Society Accredited Specialist in Wills and Estates at Stacks Law Firm, says there are strict rules governing what a person granted power of attorney over another person’s financial matters can do with the money.
“The attorney ultimately is liable to criminal ramifications if they improperly take your money or transfer your assets. However proving this can be difficult if the person has lost capacity because you would have to rely upon knowledge of the breach from other persons.”
As Mr Crowther points out, giving power of attorney to someone you trust doesn’t mean you have to give them absolute power over all your finances.
“You can insert clauses that allow a single attorney to withdraw funds less than $500 but two attorneys must sign for anything above that. You can limit an attorney’s access to just one of your bank accounts and no control over other assets such as property.
“You can appoint two or three people with powers of attorney who all have to sign before a major financial transaction – such as selling property to pay for a nursing home.”
If relatives or friends are concerned a person is misusing the power of attorney and the person who appointed the attorney has lost capacity, then concerned relatives can make an application to the Guardianship Tribunal to remove the attorney.
“They can also sue the attorney for fraud through the courts. That however can be expensive. If they blew it all on the pokies and have no assets there might be no point.”
It’s best to get expert legal advice before granting a person power of attorney.