Attention all Attorneys Appointed Under an EPOA – Avoid the Disappointed Beneficiary Situation

Being appointed as an Attorney under an Enduring Power of Attorney (EPOA) to make financial and/or personal decisions for a person carries strict moral and legal obligations.

This is rightfully so, as the Attorney is potentially being entrusted with total control over a person’s (under law known as the principal’s) assets and personal decisions.

However, even the most dutiful Attorney may fail to consider the final Will of the principal, and what bequests the principal intends to make upon their death.

In this article, we emphasise the importance of being cognisant of the principal’s Will, and the detrimental consequences of acting inconsistently with the Will.

Why is the Will relevant?

The Will is pertinent because if an Attorney is not aware of what assets the principal wishes to gift under their will, the Attorney risks selling assets which a beneficiary under the Will may have an entitlement to.

This situation can and should be avoided by simple enquiry as to the terms of the principal’s Will.

The Attorney has a statutory right to all information that the principal would have been entitled to if the principal still had the capacity to make decisions, and that information is necessary for the Attorney to make informed decisions.

This would include reviewing and obtaining a copy of the principal’s Will so the Attorney is aware of the specific property that the principal wishes to gift, and ensure those gifts do not fail through the lawful actions of the Attorney.

The Attorney may obtain a copy of the Will by requesting same from the storer of the Will, be it a private law firm or the Public Trustee.  The Attorney should provide an original or certified copy of the EPOA for the storer to sight and also provide evidence that they have authority from the principal to obtain a copy, or the principal has lost capacity and it is appropriate that the Attorney has a copy for the purpose of carrying out their lawful duties.

The Attorney cannot obtain the original Will.

What happens if an Attorney sells an asset that was to be gifted?

Where an asset is disposed of by an Attorney while exercising their lawful rights under an EPOA and a beneficiary ultimately misses out on the intended gift when the principal dies, the beneficiary is entitled to compensation from the estate.

In Queensland, this specific situation is dealt with under section 107 of the Powers of Attorney Act 1998 (Qld), which enables the disappointed beneficiary to apply to the Queensland Supreme Court for an order for compensation from the deceased estate.

The Court’s power to compensate is discretionary, and when considering the application, it will examine the entire value of the deceased estate. Importantly, the compensation cannot exceed the value of the lost gift.

This carries a number of potentially unfavourable consequences due to the inherently risky nature of judicial discretion:

• The Court may make an order for compensation that affects other beneficiaries under the will by diminishing their respective entitlements;
• The Court may refuse the application if it is not satisfied it is appropriate to order for compensation;
• The Court may order compensation that is proportionate to other beneficiaries’ gifts under the Will, or alternatively, may make only a small provision of compensation for the disappointed beneficiary.

The application is an expensive and complex legal process. Accordingly, depending upon the value of the lost gift, an Application may not be financially sensible if the gift is worth less than the costs of the application. Further, there is no guarantee that compensation equal to the value of the lost gift will be awarded by the Court.

Evidently if you are unsure about your obligations as an Attorney or require assistance obtaining a copy of a Will, it is important you obtain skilled legal advice to assist you.

Macrossan & Amiet has a team of experienced solicitors to comprehensively advise you on all your EPOA and Attorney matters.

Please contact our office to make an appointment.