Victoria will introduce changes to its legal framework for powers of attorney, effective from 1 September 2015. These changes have implications for financial professionals, particularly for FPA practitioners in Victoria. The following key changes only apply to the legislation in Victoria.
Updated terminology: Financial professionals who work in Victoria, or who work with clients who have connections to Victoria, may encounter different terminology around powers of attorney. Those who make a power of attorney will be known as the ‘principal’, and those who they appoint will be known as ‘attorneys’. As such, the terms ‘donor’, ‘appointer’ and ‘enduring guardian’ will no longer be used.
Enduring powers of attorney: The current Victorian system has two kinds of enduring powers of attorney: the ‘enduring power of attorney’ (which relates to powers for financial matters) and ‘enduring power of guardianship’ (which relates to powers for personal matters). These enduring powers have been consolidated into ‘enduring powers of attorney’, which encompass both financial and personal matters. The new legislation sets the powers and obligations of this combined power, and provides for a criminal offence of up to five years imprisonment for abuse of this power. The legislation gives general oversight of the powers to the Victorian Civil and Administrative Tribunal (VCAT), and establishes more stringent conditions for witnesses.
Non-enduring powers: The current ‘general powers of attorney’ will become ‘general non-enduring powers of attorney’, to reflect the use of this appointment for a finite period, and that it does not endure if the principal should lose capacity to make decisions.
Supportive attorneys: The legislation introduces a new power of attorney – the ‘supportive attorney’. This role is designed to help professionals to assist the principal in making a decision. The power gives the supportive attorney capacity to obtain information and communicate the principal’s decision. Where the decision does not involve a significant financial transaction (defined as a transaction valued over $10,000 and most real estate transactions), the supportive attorney can take reasonable steps to implement the principal’s decision. As with enduring powers of attorney, the legislation implements criminal penalties and VCAT oversight.
Grandfathering: Powers of attorney made up until 1 September 2015, which are valid under current legislation, will remain valid after that date. Powers of attorney/supportive attorney arrangements made from 1 September 2015 will need to comply with the new legislation to be valid.