Powers of Attorney and Estates

Most people are aware that a Power of Attorney ceases at the date of death. However, there are implications which executors of estates need to be aware of.

If there have been significant transactions by an attorney pursuant to a Power of Attorney prior to death then an executor (or their solicitor) should examine the Power of Attorney to check whether :-

· It was an enduring Power of Attorney ie it allowed the attorney to act when the principal lost legal capacity;

· It was properly executed;

· Conditions were to be fulfilled before it became operative; and

· The attorney had authority to give gifts or confer benefits on the attorney or others and, if so, to what extent.

In the NSW Supreme Court of Appeal case of Bird v Bird the executors were held liable for failing to enquire into what had happened to (and take steps to recover) proceeds of the sale under power of attorney of the deceased’s property.

An executor needs also to check whether any asset, the subject of a specific gift in the deceased’s Will, has been disposed of by an attorney if their power of attorney was made after 15 February 2004. If that has occurred then the beneficiary of the asset described in the Will is entitled to any surplus money or other property arising from the sale.

An executor needs to also consider whether the attorney had been guilty of financial abuse and whether the estate should commence action against the attorney to recover damages caused by that financial abuse.

As you can see there are a number of implications that need to be taken into account by an executor if there have been dealings by an attorney with the deceased’s assets prior to death.

For specific advice see your solicitor.

Hilltops Phoenix
Hilltops Phoenix

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