New powers of attorney laws are now in effect in Victoria
The Powers of Attorney Act 2014 (Vic) (the Act) commenced on 1 September 2015, and was introduced with the intention of clarifying and consolidating a number of enduring powers of attorney laws, and to improve the protections against abuse of enduring powers of attorney.
Any Powers of Attorney made under the previous legislation will still remain valid under the new Act.
Clarify and consolidate enduring powers of attorney
With the commencement of the Act, the provisions relating to Enduring Power of Attorney (Financial) and Enduring Power of Guardianship has been repealed. However, the Enduring Power of Attorney (Medical Treatment) will continue to be regulated by the Medical Treatment Act 1988 (Vic).
The consolidation of the enduring powers of attorney into one enduring power of attorney is aimed at allowing Victorians to arrange management of financial, and personal matters.
How does the new Act improve protections against abuse of powers of attorney?
Decision making capacity
The Act makes clear that a principal (the person who has bestowed the decision making power by way of power of attorney) has decision making capacity if they are able to:
- understand the information relevant to the decision and the effect of the decision;
- retain that information to the extent necessary to make the decision;
- use or weigh that information as part of the process of making the decision;
- communicate the decision and the person’s views and needs to the decision in some way, including by speech, gestures or other means.
For the purposes of the Act, the principal is presumed to have decision making capacity, unless there is evidence to the contrary.
It’s essential to note that under the new Act, a person may not make an enduring power of attorney unless they have decision making capacity. As a consequence, when assessing a person’s decision making capacity at the time of making the appointment, great care should be exercised due to the fact that any decision made by the attorney (the person bestowed with the power to make decisions) may be challenged or invalidated.
Principles to guide decision making
The Act provides guidance for an attorney who is acting on behalf of a principal, who lacks decision making capacity to act in a way that is least restrictive of the principal’s ability to decide. The decision-maker must ensure that the principal is provided practicable and appropriate support to allow them to participate in decisions that affect them as far as possible. The Act requires that an attorney to:
- give effect to the wishes of the principal;
- encourage the principal to participate in the decision making process; and
- promote the social and personal wellbeing of the principal, while also taking into consideration the principal’s religious beliefs, values and their confidentiality.
Duties of enduring attorneys
The Act sets out the duties of enduring attorneys which are as follows:
- to act honestly, diligently and in good faith;
- to exercise reasonable skill and care;
- must not use the position for profit unless permitted under the Act;
- must avoid acting where there is or may be a conflict of interest unless the power so authorises;
- must not disclose confidential information gained as the attorney under the power unless authorised by the power or by law;
- must keep accurate records and accounts as required by the Act.
The penalties under the new Act for attorneys who use their powers dishonestly to obtain a financial advantage, or cause loss to the principal under an enduring power of attorney are significant, and can include a $90,000 fine or up to 5 years imprisonment, or both.