It is increasingly common practice to have a Power of Attorney drafted alongside your Will. Most people wish to ensure that, should they become incapacitated, someone whom they trust will be able to sign documents for them and make informed decisions about their financial affairs. It makes good sense. Generally, Powers of Attorney are not limited. They impose exclusive decision making power on one person and in some cases even allow the appointed Attorney to make provisions for themselves or to give gifts to others. With such broad powers conferred on them, what happens when this trusted person goes rogue? What happens when your attorney begins conferring unreasonable gifts on themselves or others and diminishing your estate to the detriment of you and the beneficiaries under your Will? What can be done to stop them?
Restraining the exercise of the power
The Powers of Attorney Act 2003 (NSW) allows ‘interested parties’ to apply to either the Supreme Court or the New South Wales Civil and Administrative Tribunal (NCAT) to have a Power of Attorney reviewed. An interested person includes the principal themselves (should they have capacity) or any other person that might have a legitimate interest in the matter or a genuine concern for the principal. This could include a beneficiary under the principal’s Will, a family member or even a close friend.
The tribunal/court has broad power to consider the actions of the Attorney and can require the Attorney to produce reports indicating the expenditures made in their role. Ultimately, the court/tribunal has the power to decide on whether the actions of the Attorney are both in the best interests of the principal and reflect the wishes of the principal. If they find that this is not the case, they can make any wide range of orders, including:
- Revoking the Power of Attorney
- Changing the terms of the Power of Attorney
- Appointing a new Attorney
- Any other orders they see fit
Recovering lost assets
Of course, merely stopping the abuse of power is sometimes not enough. Sometimes an Attorney may have improperly disposed of assets. Attorneys owe their principal a ‘fiduciary duty’ which prevents them from improperly profiting from their role as an Attorney or acting with a conflict of interest. In situations where they act inconsistently with this duty, assets can still be recovered through an application to the Supreme Court.
How can we help?
Andreyev Lawyers has considerable experience in drafting Powers of Attorney and in helping clients through the process of making applications to both the NCAT and the Supreme Court. If you need help drafting a new Power of Attorney, reviewing one that you have already made, or making or defending a claim relating to Power of Attorney, we can help. Call us on 1300 654 590or email us for a no obligation chat.
The information contained in this post is current at the date of editing – 16 June 2023.