Powers of Attorney Conditions and Limitations

Written by: KP Carmody & Co

Power Of Attorney

Power Of Attorney

Previous issues have dealt with capacity of the principal or grantor of the Power of Attorney and the scope of the attorney’s authority. Today’s article will deal with some more issues regarding Powers of Attorney.

The new form of Power of Attorney provides for Additional Powers and Conditions and Limitations. These areas allow for the expansion of what the attorney may do or alternatively provide restrictions of the attorney’s authority.

Any power that you grant to your attorney will be interpreted strictly. For instance if you grant to your attorney a power to sell and lease this does not include a power to lease with an option to purchase. With every power, specific and unambiguous expression is needed.

Examples of conditions and limitations which a principal may wish to impose on the attorney’s authority are:

  • Although now the subject to legislation the principal may wish to specify that the attorney cannot deal with property which the principal has given to someone in the principal’s will. This could be subject to an exception should there be a need to sell this asset for example to pay a bond to enter a retirement villa or such like;
  • For the above purposes the Power of Attorney may specify that the attorney may obtain a copy of the principal’s will;
  • The principal may wish to specify conditions or limitations on how the attorney is to conduct the principal’s business or for instance make a direction to sell or wind up the business in given circumstances;
  • The principal may wish to specify directions relating to the principal’s superannuation entitlements;
  • The principal may wish to specify the expenses that the attorney may be reimbursed out of the principal’s assets. As a fiduciary an attorney is able to claim reasonable expenses, reasonably incurred;
  • The principal may wish to place conditions on the sale of land belonging to the principal;
  • The principal may wish to revoke earlier powers of attorney which remain operative unless revoked;
  • The principal may wish to specify out of which accounts or particular assets the principal’s debts are to be paid;
  • Other issues with which the principal may wish to make directions include dealing with pets, risky investments, conduct of litigation on behalf of the principal and accounting records meant to be kept by the attorney.

To be effective as an enduring power of attorney it must be signed in front of a prescribed witness (which includes a registrar to the court and legal practitioner). An enduring power of attorney means that it will still be effective when and if the principal loses legal capacity. The prescribed witness must explain the nature of the power of attorney and certify that the parties appeared to understand it.

By law an attorney must act in the best interests of the attorney and can only benefit from the principal’s property and assets as provided for in the power of attorney or by the reimbursement of reasonable expenses incurred by the attorney in carrying out the attorney’s duties in a reasonable manner.

The contents of this article are general in nature. For advice specific to your circumstances, please contact your legal practitioner.

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