Powers of Attorney - precision, protection and practicality
Enduring Powers of Attorney (EPOAs) are more than just legal instruments—they're lifelines for individuals navigating incapacity, and critical tools in estate planning. Yet, their effectiveness hinges on how well they're drafted.
This blog post takes a look into the nuances of tailoring EPOAs to meet both legal requirements and personal circumstances.
The EPOA as a legal entity
At its core, an EPOA is a formal agency relationship. It empowers someone (the attorney) to act on behalf of another (the principal), even after the principal loses mental capacity. This enduring nature is what sets EPOAs apart from general powers of attorney, which lapse upon incapacity.
However, because EPOAs are creatures of statute, their validity and scope depend heavily on the governing legislation in each Australian jurisdiction. From NSW to WA, each state has its own rules around form, witnessing, and registration. Estate planners might need to draft jurisdiction specific EPOA’s when clients hold assets across borders.
One Size Doesn’t Fit All
While prescribed forms exist in many jurisdictions, relying solely on templates can be risky. Effective EPOAs require:
• A thorough review of the principal’s financial and personal circumstances
• An understanding of statutory powers and limitations
• Strategic inclusion (or exclusion) of specific powers
For example, in NSW, Schedule 3 of the Powers of Attorney Act 2003 (NSW) outlines a wide array of financial powers—from paying debts and managing investments to undertaking real estate transactions. But not all powers are appropriate for every principal.
What Attorneys Can’t Do
Some acts are inherently personal and cannot be delegated, such as:
• Making a Will
• Voting
• Swearing affidavits
• Creating or revoking another EPOA
Interestingly, while attorneys can’t make a Will, they may be able to renew a binding death benefit nomination (BDBN) for superannuation purposes—provided it’s not testamentary in nature and aligns with the principal’s best interests.
However, some APRA supervised funds will not accept a BDBN from an attorney. If a principal proposes to permit the attorney to make, confirm or change a lapsing BDBN, it will be appropriate to first ensure that the trustee of the fund will accept any such nomination.
A principal may wish to expressly state in their EPOA, that in relation to an APRA supervised fund of which they are a member, that an attorney can confirm a lapsing BDBN in respect of the payment of superannuation death benefits by the trustee of an APRA supervised fund, but also state expressly that the attorney cannot change the person nominated in any confirmation or a lapsing BDBN.
Superannuation and SMSFs: A Special Case
There are unique considerations around Self Managed Super Funds (SMSFs). Under section 17A of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act), an attorney can step into the role of trustee or director of the corporate trustee—if properly appointed. This doesn’t happen automatically. The fund’s governing documents must be reviewed and updated accordingly.
Duties of Attorneys: Fiduciary and Beyond
Attorneys are bound by a suite of duties, including:
• Obeying the terms of the EPOA
• Keeping the principal’s property separate
• Maintaining proper accounts
• Acting unanimously if appointed jointly
• Avoiding delegation unless expressly permitted
These duties reflect the fiduciary nature of the role. Attorneys must act in the principal’s best interests, avoid conflicts, and maintain transparency.
Family Law and EPOAs
Can an attorney initiate divorce proceedings? Yes. In the Federal Family Court case of Price v Underwood [2009] FamCAFC 127, the court allowed an attorney to file for divorce on behalf of a terminally ill principal, recognizing the principal’s wishes and the broader estate planning implications.
Final Thoughts
Drafting an EPOA isn’t just about filling out a form—it’s about crafting a document that anticipates future needs, respects legal boundaries, and protects the principal’s interests. Whether you're a legal practitioner or someone planning your estate, understanding the depth and detail involved in EPOAs is essential.
If you're looking to refine your EPOA or explore how it fits into your broader estate plan, consider seeking tailored legal advice. The right drafting today can safeguard your tomorrow.
