An Enduring Power of Attorney (EPOA) is a legal document under which a person (the principal) appoints someone else (the attorney) to make financial and legal decisions on their behalf. An attorney may be authorised to operate bank accounts, pay expenses, manage investments, sign documents, and buy or sell property, depending on how the document is drafted.
Powers of attorney can be exercised from the date the document is signed, and critically, continue to operate after the principal loses capacity. This is what makes an EPOA such an important, protective, and powerful document. But in the wrong hands, it can be a dangerous one. Once the principal can no longer scrutinise transactions or revoke the appointment, misuse can often go undetected.
Suspecting someone is misusing their power as an attorney is deeply distressing (particularly if the person you suspect is family). If you think this is happening to someone you know, here are some warning signs you can look out for:
What are the legal responsibilities of being an attorney?
An attorney is bound to act in accordance with instructions set out in the EPOA and for the benefit of the principal. Full stop. The attorney owes a general duty to the principal, and must keep proper accounts and records of all dealings and transactions under the power (if they fail to do so, they have committed an offence).
In practice, this looks like:
- keeping the principal's money separate from their own;
- maintaining proper accounts and records;
- avoiding conflicts of interest;
- never using the principal's assets for their own purposes; and
- never making gifts or conferring benefits unless properly authorised.
Even if an EPOA grants broad powers, an attorney does not have licence to breach their fiduciary duties by acting improperly.
Common warning signs of misuse to look for.
Financial abuse tends to creep in gradually, and individual transactions can look entirely ordinary in isolation. These are the red flags I advise clients to watch for in the attorney:
- making unexplained withdrawals or transfers from bank accounts;
- making large or unusual payments to themselves or their family members;
- giving interest-free loans or gifts to themselves or their family members;
- selling or transferring property for little or no consideration;
- changing bank accounts or financial arrangements the principal did not request;
- using the principal's money to fund their own expenses;
- entering financial transactions that cannot be readily explained; and
- failing to meet the principal's expenses despite there being sufficient assets.
I also urge you to pay attention when these signs are accompanied by the attorney:
- refusing to explain why they need the EPOA document;
- becoming combative when their intentions are questioned; and
- refusing to give reasonable information about financial transactions.
You should also watch for signs that your loved one has become withdrawn, anxious, nervous, or has lost confidence in a way that seems out of character. I've had matters begin simply because a family member noticed something seemed "off".
A real-life example of misusing an Enduring Power of Attorney.
Without drawing on specific case law, there are patterns of EPOA misuse that get reported through SACAT (South Australian Civil and Administrative Tribunal). Below is an example that combines several points raised in these reports:
An elderly parent appoints an adult child as their attorney. Some time after the parent moves into residential aged care and loses the practical ability to manage their own bank accounts, the attorney begins making transfers that serve their own interests rather than their parent's; selling the family home to themself or a relative well below market value, redirecting funds into their own accounts, or simply letting the parent's aged care fees go unpaid while that money is used elsewhere.
In a case like this, the attorney has breached both their statutory duty under the Act and their fiduciary obligations. The principal, or after their death their estate, can seek to have the transactions unwound and recover misapplied money (potentially with interest). The executor of an estate can pursue conduct that occurred during the principal's lifetime.
It's not unusual to see cases like this where an attorney starts treating an anticipated inheritance as though it's already theirs, spending or transferring assets in a way that pre-empts what the principal's will says should happen. An attorney is not generally required to preserve every asset for the eventual beneficiaries, but they cannot manage the principal's affairs for their own future benefit. The assets remain the principal's to be managed for the principal's benefit for their whole lifetime.
What you can do if you think an attorney is misusing their power.
If the principal still has capacity, they can revoke the power of attorney and make a new appointment. If the principal has lost capacity, a family member, friend, or another person with a genuine concern for their welfare can apply to the South Australian Civil and Administrative Tribunal (SACAT). The applicant does not have to be a beneficiary of the principal's estate.
SACAT will review the power of attorney, require accounts and records, vary or revoke the appointment, remove the attorney, appoint a substitute decision-maker, or place the principal's affairs under independent administration.
If you have a feeling something isn't right, I suggest the following action:
- Document what you have observed. Record transactions or conduct that you are concerned about.
- Get legal advice. A lawyer can help assess whether the circumstances are genuinely concerning, identify what information might be relevant, and advise on the options available.
- Report where appropriate. Concerns about abuse, neglect, or exploitation can be reported to the Aged Rights Advocacy Service or the national Ageing and Disability Abuse helplines.
Is an EPOA worth the risk?
100% yes. Nobody knows what life has in store, and appointing someone you genuinely trust to manage your affairs should you lose capacity is one of the most valuable things you can do, regardless of your age or health.
You can read more about the importance of having a valid and up to date Enduring Power of Attorney HERE
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The contents of this article is general information only and does not constitute legal or financial advice. It is not intended to be a substitute for either and should not be relied upon as such. You should seek independent professional advice in relation to your specific circumstances.