What duties does an Attorney have?

An Attorney acting for a person (the Principal) under an Enduring Power of Attorney has many responsibilities and duties. Their main duty is to always act in the best interest of the Principal. Whether there is one Attorney, or several Attorneys, they all have the same obligations when acting.

When an Attorney’s power is exercisable

When making an Enduring Power of Attorney, the Principal can specify a time or occasion from which the Attorney’s power is exercisable.

Section 39 of the Powers of Attorney Act 2014 (the Act) states the following times or occasions a Principal may make an Attorney’s power to exercise their duties under the Act:-

1. Immediately on the making of the Enduring Power of Attorney; or
2. When the Principal ceases to have decision making capacity for the matters or matter; or
3. Any other time, circumstance or occasion; or
4. Where a time or occasion is not specified, the Attorney’s power is exercisable on and from the making of the Enduring Power of Attorney.

If an Attorney’s power is exercisable immediately, the Attorney will only need to act for the Principal when required. While the Principal has the decision making capacity to manage their affairs, the Attorney must act in accordance with the Principal’s instructions and at their direction.

Duties of an Attorney

Under the Act, an Attorney:-

5. Must act honestly, diligently, in good faith; and
6. Must exercise reasonable skill and care; and
7. Must avoid acting where there is or may be conflict of interest. The exception for this is as stated in Section 65 of the Act, which states that an Attorney is only permitted to enter into conflict transactions when:
   1. the Principal, before the time of the transaction, authorises the Attorney to enter into the conflict transaction. The Principal must, at the time of authorising the Attorney, have decision making capacity for the transaction; or
   2. the Victorian Civil and Administrative Tribunal (VCAT), before the time of the transaction, authorises the Attorney to enter into the conflict transaction; and
8. Must keep accurate records and accounts for all financial matters and for personal matters, all material dealings and transactions.

What an Attorney cannot do

Under the Act, an Attorney:-

9. Must not disclose confidential information gained as the Attorney, unless specifically authorised by the Principal under the Enduring Power of Attorney or by law; and
10. Must not use the position of Attorney for profit. The exception for this duty is as stated in Section 70 of the Act, which states that “an Attorney under an Enduring Power of Attorney is not entitled to remuneration unless it is specifically authorised by the Principal under the Enduring Power of Attorney or by law”; and
11. Must not “mix” their property with that of the Principal’s property and doing so would be in breach of the Attorney’s obligations. When it comes to managing the Principal’s finances, Section 69 of the Act states that “an Attorney for financial matters under an Enduring Power of Attorney must keep the Attorney’s property separate from the Principal’s property”;

For example, an Attorney is not permitted to arrange a bank card in their personal name, to be linked to the Principal’s bank accounts, even if doing so was for the sole purpose of providing the Attorney easier and quicker access to the Principal’s bank accounts to pay their bills. This is strictly prohibited under the Act as this would be considered “mixing” the Principal’s property with that of their own.

The Act provides exception for when the above does not apply, such as property that is already owned jointly by the Attorney and the Principal like real property held as tenants in common etc; and

12. Must not gift the Principal’s property. The Act provides exceptions for when an Attorney may be permitted to make a gift of the Principal’s property.

There may be times where it may be permitted for an Attorney to make a gift of the Principal’s property and before doing so, an Attorney must consider a few things before making a gift. An Attorney is required to consider the Principal’s financial circumstances and whether the reason for the gift is considered reasonable under the Act. The gift of the Principal’s property may be made by an Attorney to the Principal’s relative or close friend. A special occasion such as a birth, or marriage, for the Principal’s relative, or close friend, may be considered reasonable for an Attorney to make a gift of the Principal’s property, whilst still taking into consideration the Principal’s financial circumstances.

As noted above, any gifts made by an Attorney from the Principal’s property must be accurately recorded by the Attorney.

When an Attorney is in breach of their duties

If an Attorney breaches their obligations under the Act, an application can be made by any interested party to the Supreme Court of Victoria or to VCAT to order the Attorney to personally compensate the Principal for any loss caused by the Attorney’s breach. It is not unusual in these circumstances that the person bringing the action also applies to have the Attorney removed. To be eligible to make application for this order, the person must have a special interest in the financial affairs of the Principal as prescribed under Section 78 of the Act.

If you are unsure of your obligations as an Attorney and require advice, please contact our office on (03) 9707 1155 or alternatively, please email us at admin@wslegal.com.au.