The Enduring Powers of Attorney Intensive hosted by STEP Qld held on April 3 provided some valuable insights into the use of EPAs and the potential for their misuse.
Ten takeaways from this seminar, for members who were not able to attend:
- Solicitors drafting EPAs should be aware that there may be a risk of disciplinary proceedings if the task is not handled with due care. Two common areas are: (1) failure to establish that the donor has capacity, and (2) failure to comply with the specific requirements of the Powers of Attorney Act 1998 (Qld). See, for example, Legal Services Commissioner v de Brenni  QCAT 340 – finding of unsatisfactory professional conduct, in respect of a failure to make sufficient enquiries about the client’s capacity. See also the guidelines published by the Law Society for use by solicitors in acting as a witness of a power of attorney, as referred to by Fryberg J in Legal Services Commissioner v Ford  LPT 12.
- With an ageing population, it is likely that significantly more inter-generational wealth will be transferred in future through transactions effected under EPAs, rather than by Wills. Some clients may be reluctant to have EPAs prepared because they do not understand why they are needed. Practitioners should advise clients fully as to the role of an EPA and why it should be regarded as an integral part of their estate-planning.
- Particular care is required with drafting EPAs. The statutory form appears straightforward but there are a number of drafting traps for the unwary. For example: has the practitioner reviewed all the assets of the donor (including interests under trusts and SMSFs) to check that the proposed EPA will confer sufficient powers to deal with those assets, and that it will comply with any restrictions in the terms of trust deeds?
- It is rarely appropriate to appoint several siblings to act jointly under an EPA. Consider as a possible alternative, the appointment of one or two siblings, with a duty to report to the others all transactions undertaken by the power holder.
- Careful thought is also required in specifying when the EPA is to take effect. Does the donor trust the donee sufficiently that the EPA can take immediate effect? If it is to take effect upon incapacity, how will that “trigger” be drafted? If it is drafted in terms of taking effect at such time as the donor’s general medical practitioner certifies that the donor has become incapable, does the donee then have a continuing duty to make periodic checks as to whether the donor has become incapable? Will the medical practitioner be willing to disclose information to the donee about the donor’s mental health?
- There is no system for the registration of EPAs in Queensland. There is a clear potential for a donee to misuse the powers they hold under an EPA. Note in particular section 73 of the Powers of Attorney Act 1998 (Qld) regarding conflict transactions. Some particular difficulties can arise where the power holder is considering a possible severance of a joint tenancy, so that the donor’s interest no longer passes by survivorship.
- Practitioners advising clients on elder law issues need to be fully conversant with the Powers of Attorney Act 1998 (Qld) and the Guardianship and Administration Act 2000 (Qld).
- The Office of the Adult Guardian plays an important role in investigating complaints concerning EPA holders abusing their powers. The name of the complainant can remain confidential.
- In practice, once improper transactions have taken place, it can be very difficult to later recover the money involved.
- Should legislative changes be introduced, to provide scrutiny of transactions undertaken by holders of EPAs? There are economic considerations involved – the cost of such arrangements could potentially be larger than the amounts that are being lost through misuse of powers (but clear data is not available as yet). Some interesting economic studies are being undertaken in this area by the Economics & Law Research Unit, University of Queensland.
Summary prepared by Richard Williams, TEP.