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Inquiry into Powers of Attorney
Terms of Reference
Referred by the Legislative Assembly on 4 December 2008.
To the Law Reform Committee — for inquiry, consideration and report no later than 31 December 2009* on law reforms aimed at streamlining and simplifying powers of attorney documents to enable more Victorians to plan for their future financial, lifestyle and healthcare needs — specifically the Committee is asked to:
- consider the differing formality requirements and terminology, and coverage of the power of attorney documents, governed by the Instruments Act 1958 and the Guardianship and Administration Act 1986;
- establish whether the donor of a power of attorney has capacity to create a legally enforceable document and differing execution requirements and the different tests that apply;
- clarify the powers granted by the donor when making a power of attorney;
- examine ways of minimising abuse in relation to the execution of and exercise of powers under powers of attorney documents;
- consider the issue of legal capacity in the context of when an enduring power of attorney is executed and activated; and
- advise on the need for adopting potential safeguards such as the registration of documents (voluntary or mandatory).
* The reporting date was extended to 31 August 2010 by resolution of the Legislative Assembly on 13 August 2009.
The Instruments Act 1958 is available for download as a .pdf file (957Kb) from the Victorian Legislation and Parliamentary Documents website.
The Guardianship and Administration Act 1986 is available for download as a .pdf file (1013Kb) from the Victorian Legislation and Parliamentary Documents website.
The Instruments Act 1958 and the Guardianship and Administration Act 1986 are also available for download from the Victorian Legislation and Parliamentary Documents website in both PDF and Word document formats.
What are powers of attorney?
Powers of attorney are legal documents that help people plan for future financial, health and lifestyle needs. They allow a person (who the law calls a ‘donor') to choose someone (called an ‘attorney') to make decisions on his or her behalf. They are a useful way to plan for future care if a person becomes unable to make decisions for him or herself, for example because of an accident or illness.
Under current Victorian law, there are different types of powers of attorney for different situations and different types of decisions:
- Financial – There are two types of documents that allow an attorney to make financial and some legal decisions.
- general powers of attorney are used where the donor is still capable of making decisions but wants someone else to, for example, when the donor is on holiday and needs someone to take care of their banking. These documents usually operate for a limited time. The attorney's powers stop automatically if the donor loses the ability (or ‘capacity') to make these decisions him or herself.
- enduring powers of attorney (financial) also allow the attorney to make financial and some legal decisions such as banking or selling property. The attorney's powers may start, or continue, after the donor loses capacity to make these decisions him or herself.
- Guardianship – An enduring power of guardianship allows the attorney to make a range of decisions for the donor, including lifestyle and some healthcare decisions. The attorney's power starts when the donor loses capacity to make these decisions him or herself.
- Medical – An enduring power of attorney (medical) allows the attorney to make certain decisions about the donor's medical treatment. The attorney's power starts when the donor loses capacity to make these decisions him or herself. The Committee has not been asked to look at powers of attorney for medical treatment.
What issues is the Committee looking at?
The Committee is considering ways to streamline and simplify powers of attorney documents so that more Victorians can plan for their future financial, lifestyle and healthcare needs.
The terms of reference for the Inquiry ask the Committee to consider some specific issues:
- Each of the current types of powers of attorney in Victoria is called something different, is made in a different way and gives different powers to the attorney. For example, someone who wants to plan for future financial, health and lifestyle decisions might have to make several different documents. Should powers of attorney be streamlined? If so, how?
- A power of attorney is only valid if the donor has ‘capacity' at the time the document is created. This means the donor must understand the document he or she is creating and the effects it will have. How should we determine that a donor has capacity at the time he or she creates a power of attorney? What evidence should we require to show that a donor has capacity? For example, should a doctor need to sign a statement that a donor has capacity?
- Some powers of attorney come into effect only when a donor loses capacity (that is, the ability to make decisions themselves). How should we determine when a donor loses capacity? What evidence should we require to show that a donor has lost capacity? For example, should a doctor need to sign a statement that a donor no longer has capacity?
- Sometimes it is not clear what powers an attorney has. What powers should an attorney have? What limits should there be on attorneys' powers? How should we educate attorneys about what they can and can't do?
- There are reports that powers of attorney are sometimes abused. For example, there are some stories about donors being pressured to grant powers of attorney and attorneys misusing their powers. How big is this problem? How can we make sure that powers of attorney are not abused? For example, should these documents be registered?