Drop into any domestic family situation anywhere in the world and a culture of “share and share alike” can usually be found. When the family is young, practically everything becomes “communal” except maybe personal clothing and sometimes even that! As the children grow up and parents grow old however, the money, property and favours that used to be passed around so fluidly, inevitably begins to stop and pool individually, especially once the children move into adulthood and form lives and families of their own. Once parents (or other family members) become too old or frail to manage their own financial/personal affairs, adult children are of course commonly appointed via Enduring Powers of Attorney (EPOA) to take up these roles on their parents’ behalf. Using an EPOA to buy goods and services for the direct use of the parent (principal) is obviously appropriate and usually uncontroversial but what happens when an attorney continues to operate on the old “share and share alike” culture and attempts to use the principal’s money and other assets to do it?
The rules in this area change according to whether or not the person (which could be the attorney themselves or another family member) receiving the benefit of the money (let’s call them the “payee”) is considered to be dependent on or independent from the principal.
Payments to independent family members
When the payee is independent, the general rule is that no payment can be paid even if you don’t use the Power of Attorney. Further, neither an attorney or any family member working on the attorney’s behalf is entitled to be personally “remunerated” (ie. paid) for performing any services for the principal but is entitled to:
(a)receive a carer payment or other benefit from the Commonwealth or State Government if they are providing home care for the principal;
(b)a payment for gratuitous care as part of any personal injuries compensation payout if that is how the principal came to be incapacitated; and/or
(c)recompense for expense incurred by the attorney/family member in providing care for the principal.
Items (a) and (b) are straight forward and rarely controversial especially since the money is coming from an independent source anyway. “Reasonable recompense” however, is typically coming out of the principal’s own money and consequently is an area where inter-family conflict regularly occurs.
In a recent case decided by the Guardianship and Administration Tribunal, a $50 per week payment taken by the attorney for “general assistance service” including transport and laundry, via the attorney’s own car and washing machine was ruled to be “recompense” and consequently allowed. In another case however, an hourly rate of payment for services rendered by the attorney was ruled to have crossed the line and was disallowed on the basis that it amounted to “remuneration” even though the principal had provided the attorney with written instructions authorising the payment.
Payment to dependant family members
A “dependant” is defined in the Powers of Attorney Act and the Guardianship and Administration Act (“the Acts”) to mean “a person who is completely or mainly dependent on the principal”. A clear example of this would be a young child of the dependant, who lives with the principal and who relies solely on the principal for accommodation, clothes and food. However, it should also be noted that the definition does not require that the dependant and principal are blood relatives, and so the definition could also extend to step-children as well as adopted children who are completely or mainly financially dependent on the principal.
A spouse may in some circumstances be considered also to be a “dependant” on the principal, but those circumstances need to be examined in each case. Critical will be a determination as to whether or not the spouse is able to support themselves financially without recourse to the principal’s funds.
An example that led the Tribunal to consider that a spouse did fit the definition of “dependant” involved the following circumstances:
- The principal had been injured in a motor vehicle accident and had lost capacity as a result. In a short period following the accident when she had capacity, the principal appointed her husband as her attorney.
- The principal received a significant damages award due to the injuries suffered in the accident. The principal also required significant care as a result of the injuries.
- The principal’s husband left his employment so that he could care for his wife on a full time basis. As a result, the husband had no means of financial support other than the principal, and was reliant on the principal for the payment of his day-to-day living expenses and also expenses relating to the conservation and improvement of the family home.
In another recent case, the Tribunal found that a person’s main financial support was a government pension and that she only received other minor financial support from the principal. The Tribunal found that these circumstances meant that the person did not fall within the definition of dependant for the purposes of the Acts.
Once a person (which could include the attorney themselves) is determined to be a “dependant”, the Law states that an attorney may provide for the needs of a dependant. “Needs” would include expenses such as food, clothing, medical expenses and accommodation expenses. However, the Act then qualifies this by requiring that what is provided from the principal’s estate to the dependant to cover their needs must not be more than what is reasonable having regard to all of the circumstances, in particular having regarding to the principal’s financial circumstances. So for example, it would not be reasonable to pay for designer clothes for a dependant in circumstances where the principal’s estate is modest.
When the payee is not also the attorney
The Powers of Attorney Act does not differentiate between a payee who is also attorney and a payee who is not an attorney. The same rules apply to both payments received by attorneys and payments received by other persons. Issues may however arise where the attorney refuses to provide payments to a payee who is legitimately entitled to receive those payments under the Act. This may be because the attorney is concerned about breaching the Act (for example, they are concerned that the person does not fit the definition of “dependant”) or the attorney is concerned about differing opinions between family members and does not want to cause conflict.
In these circumstances, either the attorney or the dependants of the principal are entitled to apply to the Queensland Civil and Administrative Tribunal for directions and guidance as to whether the attorney is able to make payments from the principal’s funds for their benefit, and what payments can be made. If the attorney acts in accordance with the advice, directions or recommendations of the Tribunal, then the attorney is taken to have complied with the Act and does not need to worry about the consequences of breaking the rules.
Consequences for an attorney who breaks the rules
An attorney who breaches the requirements Powers of Attorney Act risks the following:
- An order by a Court or Tribunal that the attorney is removed and can no longer act as the principal’s attorney; and/or
- Having a Court order that the attorney pay the principal (or the principal’s estate if the principal is deceased) compensation, including interest. However, the Court has the discretion not order that the attorney pay compensation if the Court considers that the attorney acted honestly and reasonably and ought fairly be excused for the breach of their powers.
An application for removal of an attorney can be made to any Queensland Court or to the Queensland Civil and Administrative Tribunal.
Interestingly, only a Court has the power to order that compensation be paid by an attorney who has failed to comply with the Powers of Attorney Act in the exercise of their power. An application for compensation cannot be made to the Queensland Civil and Administrative Tribunal.
Further, if the application for compensation resulting from the actions of an attorney relates to a principal who is deceased, and the person’s benefit in the deceased’s estate is lost because of the attorney’s actions, then the application can only be made to the Supreme Court.
What if the Principal personally signed the documents and the Power of Attorney Document was not used
In cases where the principal has lost mental capacity, any attempted transaction by that person will be invalid and can be reversed upon those grounds. In cases however where the principal had full capacity then a combination of Sections 73 and 87 of the Powers of Attorney Act create a presumption that there has been undue influence placed upon the principal to enter into the transaction and consequently unless there is clear evidence that the principal entered into the transaction completely of free will and without any pressure, the transaction again, can be invalidated and reversed on these grounds.
Charmaine Feggans is a Solicitor employed with Zande Law, Solicitors specialising in the drafting of Wills and administration of Deceased Estates. Please feel free to review our firm and staff profiles at www.zandelaw.com.au.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.