Do you have valid and effective powers of attorney in place? If so, do those powers provide you with the best possible protection in circumstances where your attorney is required to make important decisions on your behalf?
In September 2015, the Powers of Attorney Act 2014 (“the Act”) brought significant changes to powers of attorney dealing with financial and personal decision-making in Victoria.
Amongst the most significant changes, the powers of attorney dealing with financial decision making and personal/lifestyle decisions are now contained within one document now called an ‘Enduring Power of Attorney’. These powers previously required two separate documents known respectively as an Enduring Power of Attorney (Financial) and an Appointment of Enduring Guardian.
The power dealing with medical decisions continues to be dealt with by a separate document known as an Enduring Power of Attorney (Medical Treatment).
Another important addition is the power for the Supreme Court or the Victorian Civil and Administrative Tribunal (VCAT) to order an attorney to pay compensation to the principal (the person who appointed the attorney) for any loss caused by the attorney whilst acting improperly on behalf of the principal.
In short, should your attorney do the wrong thing whilst acting on your behalf (eg. misappropriating assets, making investment decisions without appropriate advice resulting in adverse outcomes, or acting where there is a conflict of interest between their personal interests and your own, causing loss) then you, your other attorneys or family members, or the executor of your estate (should the wrongdoing and loss be discovered after you have died) can apply (subject to Estate time-limits) to VCAT or the Supreme Court for an order that the attorney pay compensation to your or your estate for the loss they have caused.
This added protection only applies to conduct of the attorney which occurs after 1 September 2015 and, in reality, will only apply to enduring powers of attorney which are in the new format and executed after 1 September 2015. Therefore, whilst still valid, powers of attorney signed before 1 September 2015 do not offer the ability to seek compensation from the attorney for loss as a result of their wrongdoing.
Enduring powers of attorney are a key element of any strong estate plan, and these documents should evolve as part of a regular review of your estate plan to ensure that they are relevant and appropriate and meet your changing circumstances and needs.
Your powers of attorney should be drafted to complement your overall estate plan, appointing the right combination of people and commencing at the right time to achieve a balance of protection and practicality which is tailored to your particular circumstances and wishes.