Can my Enduring Financial Attorney sell my property?

April 1, 2015

This is a question which takes centre stage in many different ways, particularly in these times of increasing dementia and increasing costs of residential care.

Consider this scenario:

  1. Joan has lived in her home for all of her married life, is widowed, and has recently been diagnosed with dementia. She has been assessed as being unable to live at home and as needing full time residential care.
  2. She appointed her niece Heather as her Enduring Financial Attorney and Enduring Guardian at a time when she had full legal capacity. She has not seen her son and daughter in recent years;
  3. She has an old Will, which appoints her son as Executor, and which leaves her home to him and her residuary estate to her daughter.

Heather has done all the right things, has arranged an Aged Care Assessment for her Aunt, has found a suitable aged care residential facility and has received detailed financial advice. The financial advice suggests that in order to afford good quality residential accommodation, Joan’s home will have to be sold.

Legally, unless the Enduring Financial Power of Attorney contains any restrictions on her powers, Heather is able to sell her Aunt’s property on her behalf and use the proceeds of sale for a Residential Accommodation Deposit and for her Aunt’s ongoing care.

Nevertheless, there have been cases where the Beneficiary of a Deceased person’s home under a Will, has challenged the right of the Attorney to sell the home and to use the funds for the care of the person before they died. This is because the doctrine of ademption holds that if an asset no longer exists at the time of the Deceased’s death, then the beneficiary receives nothing in place of the gift.

Fortunately, these cases have, in the main, found that where a Deceased’s home has been sold to pay for the Deceased’s care during his or her life, the doctrine of ademption will not apply and the beneficiary to whom the home was left, will receive whatever proceeds of sale remain, after the deceased’s death.

The facts of Joan’s situation highlights the potential for conflict between an Enduring Financial Power of Attorney or Enduring Guardian and an Executor or Beneficiary and shows the importance of choosing Enduring Attorneys very carefully.

The person fulfilling the roles of Enduring Financial Attorney and Enduring Guardian must be some-one you trust completely to make the right decisions for you, and to act in strict compliance with the legal obligations imposed on an Attorney. These include acting at all times in your best interests, avoiding situations of conflict with their own interests, where possible making the same decisions as you would have made, keeping accurate records of dealings and transactions made under the power and keeping the Donor’s property separate from their own.

The fact scenario described also highlights the need for a these Attorneys to obtain clear and documented medical and financial advice, before embarking on any dealings with your property and of keeping meticulous records of all financial and other transactions.

If you would like any further information on matters raised in this article please contact Madelaine Pelser at Hutchinson Legal on 9870 9870.

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