Have you appointed the best person to manage your financial affairs?

Who and how to appoint your attorneys.

Many Victorians are aware of the importance of having Enduring Powers of Attorney (EPA) in place. It is not only important to have these estate planning documents in place but to also have confidence that you have appointed the best person/s to be your attorney/s and, that you have given them appropriate and sufficient powers to carry out that role.

Who should you appoint?

If you fail to appoint an attorney under an EPA and lose decision-making capacity, a loved one, relative or friend will be required to make an application to the Victorian Civil and Administrative Tribunal (VCAT) for Administration and Guardianship Orders to manage your finances. However, inappropriate appointments that prove to be unworkable, can also lead to your family and friends seeking the intervention of VCAT whose jurisdiction includes the review of EPAs.

Person/s to consider:

• Spouse (consider their age and financial acumen);
• Child/Children (see below);
• Friend (consider, their values, financial acumen, trustworthiness);
• Advisor (consider availability, values, understanding, financial acumen and fees); or
• Professional Trustee Company (consider fees and willingness to confer with family).

If you are considering appointing your adult children as your attorneys, consider their relationship and ability to work together to manage your affairs, including:

• Whether they are able to work together;
• Whether their views and values with respect to expenditure and managing money are so far apart that they cannot be reconciled, preventing them from making decisions jointly when required;
• Whether they have a close relationship, communicate well with each other and are likely to respect and support each other in ensuring that your needs are met, even if they may not agree on all matters from time to time;
• Whether they have demonstrated an ability to manage their own money and other assets responsibly;
• Whether they are motivated by self-interest;
• Whether the child’s partner is likely to improperly influence your child’s decision making; or
• Whether appointing one child/children to the exclusion of the other children will result in the appointed child being obstructed by their siblings, making it impossible to carry out the role effectively.

The greater the value and complexity of your estate, the greater the need to consider attorneys with more sophisticated credentials and/or financial acumen.

This may point to a particular child with appropriate skills, a trusted professional advisor or a Trustee Company.

How they are appointed

In some cases, attorneys are appointed jointly to ensure all attorneys are aware of and authorise the transactions entered into on your behalf and that they are kept accountable for their actions. However, joint appointments can be troublesome for various reasons, including:

• On a practical level, not all attorneys may be available to attend financial institutions, sign documents together and do online banking;
• If one attorney is outside the jurisdiction, unwell or hospitalised, the other attorneys cannot act on your behalf; and
• If the attorneys do not agree on certain financial transactions, an outcome cannot be achieved. For example, where an attorney (who is a child of the principal) is motivated by the preservation of their future inheritance, they may resist or disapprove lifestyle-enhancing spending such as new furniture, urgent maintenance and repairs to the principal’s residence. An attorney seeking approval from their co-attorney may be rendered powerless and may even feel obliged to incur such an expense personally for the principal’s benefit. Such circumstances inevitably lead to VCAT applications to review EPAs, to revoke or partially revoke them or to seek Administration Orders.

Appointing your attorneys jointly and severally, or by majority, can ensure that decisions can be made and that there will be someone authorised to make decisions on your behalf.

Accountability can be achieved by including limitations and conditions. Attorneys can be directed to report to each other in relation to transactions they carry out on their own and reporting can be as frequent as the principal directs. Rigby Cooke’s lawyers are experienced in both the preparation of tailored EPAs as well as applications to VCAT.

We understand the problems that can arise, and our Wills, Trusts & Estates team can work with you to ensure your EPA is tailored to mitigate future potential issues and conflicts. We can assist you to ensure that your wishes are followed and that you will be well taken care of.