What is an Enduring Power Of Attorney? An Enduring Power of Attorney is a written formal process whereby a person, ie. a principal, appoints a person or persons who can then make either health/personal and/or financial decisions on behalf of the principal.
The person receiving the power to make decisions on behalf of the principal is called an attorney.
Gift from the principal – In many cases, a child is appointed by the parent to be the enduring power of attorney, and from time to time, the parent may gift money to that child. If you are an attorney then, you must exercise extreme caution when receiving gifts from the principal. The reason is this – Section 87 of the Enduring Power of Attorney Act 1998 raises a presumption of undue influence on the part of the attorney to receive gifts from the principal even though the Attorney has played no part in inducing the gift from the attorney.
In a recent Supreme Court matter of Baker and ors v. Affoo and ors the principal has appointed his good friend of many years and neighbour as his attorney. During this lifetime, the principal made a will and personally transferred his property to a Trust belonging to the attorney’s children. The Court held that a gift by a principal to the attorney’s children was void because of undue influence exercised by the attorney. In this case, the attorney did not directly receive the gift but the Court was satisfied that the element of undue influence was present.
How can the Attorney rebut the presumption of undue influence?
It is recommended that where an attorney is to receive a gift from the principal that there be evidence in writing that the principal had:
- Receive independent legal advice. This means that the legal practitioner advising the principal must be independent of the attorney.
- Receive independent financial advice. This means that the financial adviser advising the principal must be independent of the attorney.
And finally, if the principal is elderly or if there is any concern regarding the capacity of the principal, then it will be imperative to obtain medical evidence from the principals treating General Practitioner as to the capacity of the principal before a Court can be satisfied that there was no undue influence by the attorney when the gift was made by the principal.
If you have any queries regarding the above, please do not hesitate to contact us on 3482 6999.