Insights Paper | Power of Attorney Legislation to be Reviewed

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Insights Paper | Power of Attorney Legislation to be Reviewed

June 2020

At a glance

• The South Australia Law Reform Institute, as directed by the Government, will review the laws which relate to Powers of Attorney in this State. 
• Recent media coverage highlights the potential for financial (and other) abuse of older people via the mismanagement of Powers of Attorney. 
• As it may be a while before we see positive changes to the legislation, tips are given in this article to minimise the potential for exploitation of Powers of Attorney.

After an increasing number of reports of instances of abuse, Attorney-General Vickie Chapman has announced that the laws in SA which relate to Powers of Attorney will be reviewed.

The review will be conducted by the University of Adelaide’s South Australian Law Reform Institute which has been asked to consider what problems exist under current legislation, what improvements could be made and what alternative options from other jurisdictions might work.

Some of the main criticisms of the current laws are:

1. How to determine when a Power of Attorney comes into effect (as this can depend upon whether or not a person has their legal capacity, which can be a difficult issue to determine, and may require a medical opinion or even a legal determination to prove).
2. It may be perceived that there is limited immediate recourse against a person who abuses their power under a Power of Attorney (albeit that there are provisions contained within the Powers of Attorney and Agency Act 1986 which may provide some assistance), albeit to a limited extent.

Although it may be still be some time before we see any changes to the current law, it is a step in the right direction.

There has been much in the media lately about the potential for financial (and other) abuse of older people and the role that Powers of Attorney may play.  This may be largely because a Power of Attorney may permit an attorney to engage other persons to give effect to their decisions (i.e. land agents, accountants, financial planners, lawyers etc) and act on their behalf concerning decisions such as financial, property or legal issues.  Often, these decisions can be made (depending on when the Power of Attorney is effective) irrespective of whether or not a person has capacity to make the decisions themselves or not. 

Powers of Attorney are an important part of a person’s estate planning.  However, care does need to be taken when preparing a Power of Attorney to prevent the potential for abuse from occurring.  For example:

• When considering whether to put in place a Power of Attorney, select the appropriate person/s who you trust will act on your behalf as your Attorney carefully and in your best interests and not their own.
• If applicable, consider appointing more than one attorney and if you do, consider whether those persons must act jointly, so that decisions can only be made together.
• Consider whether you might limit the power that you provide to your Attorney.  For example:
  • When the Power of Attorney becomes effective, (ie upon signing or only upon loss of legal capacity)?
  • When the Power of Attorney comes to an end (noting that death will automatically revoke a Power of Attorney)?
  • Whether your Attorney is restricted in their ability to deal with your affairs (ie financial, property matters or even legal or other issues?
  • Can or should your Attorney be financially compensated for acting as your Attorney from your assets?

If you are considering creating a Power of Attorney, we recommend seeking professional advice from one of our estate planning specialists before doing so.  We can also assist you if you consider that someone is using a Power of Attorney correctly or inappropriately, and whether for their own benefit, or in manner inconsistent with the known wishes of the person that originally appointed them.