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Powers of Attorney & Role of the Solicitor

Written by Pearsons Lawyers

Sometimes, solicitors may be confused about the need to follow instructions provided to them by their client’s attorneys.

Pursuant to the Victorian Powers of Attorney Act 2014 (Vic) legislation the following needs to be considered:

1. Who is the client?

The client is not the attorney; the client is the person the solicitor received instructions from “the principal” and not who they have or want to appoint as their attorney. The Attorney does not stand in the shoes of the principal person who appointed them.

It is a solicitor’s responsibility to ensure that they have read all Power of Attorney documentation, checking that everything is in order, including validly of the document, signatures, commencement of power, and ascertaining whether the client has capacity to make these decisions.

The solicitor needs to validate whether the power is to commence immediately or when the client no longer has capacity, then the attorney must work with the principal person in assisting them in accordance of their instructions. There is no remuneration for being a Power of attorney, unless there is a direct expression in the document, however, in lieu of, an attorney may make an application to VCAT to seek compensation.

2. Fiduciary duties

The definition of fiduciary duties means; the obligation a party has to act in another party’s best interest, this includes being trust worthy, honest and to be legally and ethically bound by their duty. Attorneys must not disclose any confidential information, and must keep accurate records and accounts of all dealings and transactions. Attorneys must maintain separate personal and business entities to those of the principals, ensuring there are no conflicts of interest, unless they have been directed by the principal or VCAT authorities.

3. Penalties

If it is found under the Act, that an Attorney has acted in bad faith, or breached their fiduciary duties in any way, a compensation payment maybe required directly to the principal party and/or criminal charges maybe laid.

4. Sale of Property

Section 83A of the Act provides an exception where an attorney sells any property, that a beneficiary was entitled to under a will, has the same interest in any money or property arising from the sale of that item, as if the sale had not occurred. In a recent case of Re: Moran the Victorian Supreme Court held that only a specific gift will attract the benefit of section 83A. When deliberating on the contents of a Will the solicitor exercise caution to ensure that the attorney will be able to dispose of property as per the client’s instructions.

5. Principal’s will

Being an attorney does not automatically entitle you to view the principal person’s will. A solicitor needs to be satisfied that it is necessary for an Attorney to know the details of the will for the purpose for which the power of attorney has been granted, namely to manage the affairs of the person. If there is any doubt, then an application can be made to VCAT to see the will, as the solicitor will refuse. If VCAT has appointed an administrator, and that administrator holds the represented person’s will, they must ensure it is securely stored. The contents of the will may be read before or after the principal will holders’ death. VCAT does have the power to open and read a will, but this does not mean that VCAT will disclose the contents to an attorney or administrator.

6. Victoria Legislation

There is now legislation in place to allow remote witnessing of Power of Attorney documents, however, as per s5A of the act, the witness must still live in Victoria. If you are a resident of Victoria but are living overseas, you are unable to execute a Victoria power of attorney and you would need to create a power of attorney pursuant to the jurisdiction that you are residing. This may come with its own limitations, and it would be in your best interest to create such powers before you leave. However, if you have created a power of attorney in another state or country, it will be recognised in the state of Victoria, as far as to the extent that it gives powers that are able to be given under the Act.

7. Red flags

If solicitors become suspicious that attorneys may be acting beyond their powers, they have a duty to investigate further, and if required, they will cease to act on behalf of the Attorney.

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