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Attorney Conflict Transactions
What are Attorney conflict transactions?
An Enduring Power of Attorney is a legal document that enables a person (the principal) to give another person (the attorney) the power to make decisions on their behalf. When an appointment is made under an Enduring Power of Attorney, the attorney(s) will be able to continue acting on the principal's behalf even after the principal has lost the mental capacity to make their own decisions.
An attorney has a duty to avoid entering into conflict transactions unless they have received authority to do so from the principal (or a court, or the Queensland Civil and Administrative Tribunal). A conflict transaction occurs when there is a conflict between a financial attorney’s duty to act in the best interests of their principal and the attorney’s own interests. This can also extend to transactions that benefit the interests of the attorney’s close friends, relatives and/or associates. If a principal wishes to allow for their attorney(s) to be able to enter into conflict transactions, then a clause authorising this should be included in their Enduring Power of Attorney.
Examples of conflict transactions
Examples of possible conflict transactions include (but are not limited to) a financial attorney:
- buying the principal’s property. e.g. an attorney may wish to buy the principal's family home after the principal has moved into a care facility, to keep the home 'in the family’;
- buying the principal's car;
- lending and/or gifting the principal’s money to either themselves, their family, friends and/or associates;
- choosing to rent out the principal’s property to either themselves, their family, friends and/or associates;
- using their principal’s money to pay for their personal expenses, including, for example, the attorney’s personal travel expenses.
There are several transactions, which could be viewed as conflicting, that are allowed in Queensland (unless there is a contrary intention expressed in the Enduring Power of Attorney). These include:
- Making gifts or donations (of a reasonable value) where the gift or donation is of the same type or nature of gift/donation that the principal would have given/made when they had capacity or might reasonably be expected to make.
- Providing for the maintenance and needs of the principal’s dependants. This can only be done if it is reasonable in all circumstances, including the principal’s overall financial circumstances.
- Managing property already held jointly between the principal and the attorney and/or property acquired jointly by the attorney and principal in place of property that was already jointly owned between them.
Choices you can make regarding conflict transactions
When executing an Enduring Power of Attorney, it is important that you carefully consider your specific circumstances, and what may be most appropriate for your attorney(s). You may or may not wish to extend your attorney’s powers to allow them to enter conflict transactions.
In your Enduring Power of Attorney, you may:
- authorise your attorney(s) to enter into any and all conflict transactions;
- authorise your attorney(s) to enter into only specific types of conflict transactions;
- provide authorisation to only particular attorney(s) to enter into conflict transactions (e.g. your spouse but not your children); or
- not provide authorisation for attorney(s) to enter into conflict transactions at all.
Consideration and caution should always be exercised when deciding whether to extend an attorney’s powers, especially if a broad power is granted that allows an attorney to enter into any or all conflict transactions. In certain circumstances, it may be more appropriate to only authorise your attorney(s) to engage in specific conflict transactions that you can reasonably foresee occurring in the future, and which you are comfortable with.
We can assist you
Please do not hesitate to contact one of our estate planning solicitors on (07) 4963 2000 or via the link below if you require assistance with preparing an Enduring Power of Attorney and/or have any queries regarding conflict transactions in general.