Enduring Power of Attorney – No Big Deal, Or Is It?
You have just been asked by your elderly parents to become their attorney (representative) under an Enduring Power of Attorney (EPA), as they need help with managing their finances. This EPA will allow you to use your parents’ money to pay bills and withdraw funds from their bank accounts for their use.
After telling your parents that you are happy to help, they go and organise the EPA. You sign the EPA, accepting your appointment as attorney, and take with you a certified copy. You then file the document for safekeeping, probably in the bottom drawer of your desk, and don’t think about it for a couple of years.
All of a sudden you receive a call from your dad requesting you go to the bank and withdraw cash for him, using your EPA. As requested, you attend the bank, present the signed EPA, get the cash, give it to your dad, and return to your everyday life.
Question: In the above scenario, have you breached any of your duties under the EPA?
Why, you ask? You have only done as directed by your father, using the EPA. Unfortunately, you have breached your reporting obligations as required by the legislation. Attorneys are required to report ALL transactions carried out under the EPA. Therefore, in the above scenario, at the very least you would be required to report in a diary or the like that on that date you were directed by your father to withdraw $X for his benefit and for his use.
Now, in addition to the above scenario, you know that your dad has had difficulties with his memory and doctors have indicated that he may struggle making financial decisions for himself.
Question: Is reporting your only obligation in that situation?
You still have reporting obligations under the legislation, however in common law there is a concept called fiduciary duty. This requires the attorney, amongst other things, to act in the best interests of the person who appointed them as attorney. This means that, since you are aware of possible mental incapacity, you have an obligation to ensure your dad is using the withdrawn money in his best interests.
Should an attorney not meet these requirements and obligations imposed by legislation and the common law, they could be subject to fines, be liable for compensating their appointer, or even criminally prosecuted, depending on the severity of the breach.
If you are being appointed as someone’s attorney, ensure that you are fully aware of your duties and obligations, so as to avoid any future problems.