An Enduring Power of Attorney is a formal document where a person (“the principal”) appoints someone else to make decisions on their behalf (“the attorney”).
In many cases, the principal is a parent who chooses to appoint their adult child as the attorney. On occasion, the parent may gift money to that child. If you are acting as an attorney then you must exercise extreme caution when receiving gifts from the principal.
Pursuant to section 87 of the Enduring Power of Attorney Act 1998, there is a presumption of undue influence by the attorney over the principal when an attorney receives a gift from the principal, even when the attorney has not acted in a way to influence the gift.
The following recommendations should be followed when a principal wishes to make a gift to their attorney in order to attempt to rebut the presumption of undue influence:-
(a) Obtain independent legal advice. That is, the principal and the attorney should each have their own independent lawyers to give them advice on the gift prior to the gift taking place;
(b) Obtain independent financial advice. Again, the principal and the attorney should each have their own independent financial advisers; and
(c) Obtain medical evidence to show that the principal has capacity to understand the decisions made surrounding the gift and the legal and financial impacts of the gift.
If you have any queries regarding the above, contact McNamara Law today on 1300 285 888 or at estates@mcna.com.au.
Author: Rebekah Sanfuentes, Principal/Legal Practice Director
