Why have an EPOA
An EPOA allows you (the Principal) to appoint person/s (the Attorney/s) to make decisions about personal matters (including health matters) and/or financial matters:
- Personal/health matters: These include decisions about your care and welfare, with whom you live and what support services you may need. Health matters relate to your health care and extend to most medical treatments, procedures and services to treat physical and mental conditions. This definition also includes end-of-life treatments aimed at keeping you alive or delaying your death.
- Financial matters: These include decisions about your financial or property affairs , expenses, investments, selling property and carrying on a business.
These matters are more specifically set out in the Powers of Attorney Act (Qld) (Act) 1998 and subject to the Act can be further refined in the EPOA document.
Features of an EPOA
- An EPOA is different from a general power of attorney in that it continues to operate even after the Principal has lost capacity.
- An EPOA can be revoked by the Principal as long as the Principal has capacity. There is no need to have the Attorney consent to or have knowledge of the revocation, although we do generally recommend that the Attorney be notified.
- An EPOA ceases immediately upon the death of the Principal.
The fiduciary role
The Attorney has fiduciary obligations to act in the best interests of the Principal, although there is no positive duty for the Attorney to act to protect the Principal. The duties only apply to the acts actually undertaken by the Attorney – not the acts NOT undertaken.
Profit and conflict rules
Two fundamental rules are the profit and conflict rules:
- Profit rule – There is a duty for the Attorney not to profit from their position as Attorney.
- Conflict rule – There is a duty for the Attorney not to place oneself in a position where one’s own interests conflict with protecting and looking after the best interest of the Principal.
A breach of the profit or conflict rule must be with the authority of the Principal and with their fully informed and free consent.
There are instances where the Principal may expressly authorise specific conflict and profit transactions. However, these terms will be closely scrutinised by a Court or Tribunal so as to ensure that the authority of the Principal was made with fully informed and free consent. Such instances are:
- contained in conflict clauses within the EPOA; or
- with the written authority of the Principal prior to the Principal losing capacity in the case of an EPOA which is granted immediately.
There is also a duty of the Attorney to account for money and assets handled by the Attorney.
Many Attorneys believe that if they are going to, for example, receive a house in any event as it is owned as joint tenants or they are the beneficiary under the Will (and the Attorney has seen the Will), the Attorney can therefore deal with the property or transfer it themselves under the EPOA if the Principal has lost capacity. This is simply not the case unless:
- the EPOA specifically provides for the dealing with the property and proceeds; or
- the Attorney applies to the Tribunal for authority to deal with the property, in which case the basis for dealing with such property would be on the basis that the Principal’s interest (sale proceeds) in the property is protected for the Principal.
When can gifts be made?
- Attorneys cannot make gifts to themselves in any manner unless specifically authorised under the EPOA. There is however no duty preventing a Principal from making gifts to an Attorney.
- It is recommended that as Attorney you only make gifts to others as directed by the Principal (if the Principal has not lost capacity) or once the Principal has lost capacity to others no greater than the usual gifts the Principal would have made prior to the Principal losing capacity. For example, if it is customary for the Principal to make $20 gifts to the Principal’s grandchildren at Christmas and this is reasonable having regard to the size of the assets.
When does an EPOA commence?
In relation to personal and health matters, the EPOA only commences once the Principal has lost capacity to make their own personal and health decisions.
In relation to financial matters, the EPOA commences when specified by the Principal. For example:
- When the Principal does not have capacity to make decisions about financial matters.
- Immediately upon signing the document.
- At a particular time specified by the Principal.
- In a particular set of circumstances.
What are the pros and cons of appointing your Attorney immediately for financial matters?
Pros:
- The Attorney does not need to prove that the Principal has lost capacity in order to act pursuant to the EPOA, which may be particularly difficult to prove in cases where the Attorney gains and loses capacity as part of an illness or injury.
- The Attorney cannot be challenged at a later date for acting outside its power in that it acted in circumstances where the Principal in fact had capacity.
Cons:
- The Attorney can act contrary to the Principal’s wishes while the Principal still has capacity. This can be mitigated by monitoring the relationship and revoking the EPOA should any issues arise within the relationship.
Ultimately it is a decision of the Principal whether the financial Attorney commences upon loss of capacity or at some earlier time.
What happens if you do not have an EPOA?
If you lose capacity and you do not have an EPOA, the Queensland Civil and Administrative Tribunal will decide who manages your financial affairs. It may be someone from your family or it may be the Public Trustee. This can be at significant expense and may result in someone you would not have selected being appointed as your Attorney.
Need assistance?
If you would like any assistance or advice regarding the preparation of your EPOA, contact Cath Champion on (07) 3007 3711 or at cchampion@mahoneys.com.au
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