Using a Power of Attorney to steal money

In Estate Planning, you have many ways of protecting yourself and your family. For example, Divorce Protection Trusts and Loans to Children.

However, while you are still alive Enduring POAs and Medical/Lifestyle POAs are the biggest protection.

The person receiving your POA is the donee. The donee is often your spouse and children. But it can be anyone you trust. The donee stands in your shoes. Whatever you can do, the donee can do. They can buy and sell property for you. They can operate your bank accounts.

Obviously, there are limits. For example, the donee cannot make a Will or vote for you.

Can an Australian POA be used against your wishes?

Can the donee use your POA for personal gain? What if this helps you as well? What if your spouse or child taking your money is in your ‘best interests’?

While you are of sound mind your attorneys must be directed by you. You remain in control.

An ‘enduring’ POA has a unique quality. If you become of unsound mind, the POA continues to operate. Your donee continues to stand in your shoes. The donee must now ‘guess’ what is in your best interest. But now we have a problem. Who is checking what your donee is doing?

How much power does the donee have? Can the donee use the POA for his own personal profit? Is this an abuse of power? Is this elder abuse? Is it legal?

An attorney can not use the POA for themselves, for their advantage

An important responsibility of attorneys under an enduring POA is that by agreeing to carry out the responsibilities of an attorney, they are under a fiduciary duty not to obtain an advantage. This is for themselves. They are not allowed to act in a way that is contrary to your interests.

Consider the case of Powell v Thompson [1991] 1 NZLR 597. It is about a POA given to their mother by two daughters going overseas:

An attorney cannot utilise a power of attorney to pay his or her personal debts. To do so contravenes the fundamental nature of an agency or fiduciary relationship. The powers of attorney are specifically directed at the management of the principal’s affairs: it is not open to attorneys to either obtain an advantage for themselves or to act in a way which is contrary to the interests of their principals.

These are useful cases on your obligations under a POA:

  • Greenland v Intellectually Disabled Citizens of Queensland [2000] QSC 84 [30];
  • Re KJS [2003] QGAAT 27 [61]; and
  • Klotz & Klotz v Neubauer & Klotz [2001] SASC 454 [33]-[37].

My son is dying. Can I use my wife’s POA to save our son?

The husband runs a business. Like all business owners, he has a high risk of bankruptcy. You follow the asset protection strategy of ‘man of straw, wife of substance‘. Therefore, he puts all his money into his wife’s name. But his wife loses mental capacity.

He needs $1m to pay doctors for their terminally ill son. Can the husband use his wife’s POA to pay for their son’s medical treatment?

Some states including New South Wales, Queensland, Victoria and Tasmania allow the husband to give gifts to relatives. However, all gifts are limited to special events not including medical benefits. Therefore, the husband cannot pay for his son’s medical treatment as a gift.

Queensland is the only state that allows the husband (as donee) under a QLD POA to pay for their son’s medical treatment. (Some states and territories may allow the spending of the money, but only via court proceedings.)

The husband has no power to draw finances under the Enduring POA for himself or their son for medical treatment. Sadly, the husband must act in good faith. He must only act in his wife’s best interest when using her finances. Saving the life of her son is not acting in her best interest. It is acting in her son’s best interest.

Can children steal from their parents using a POA?children stealing under a poa power of attorney legal consolidated

Your children hold your Enduring POA. Let us say you are of unsound mind. As donees, the children control your finances. Can your children move assets from your name into their names?

You have dementia. Therefore, you lack mental capacity. You need to move into an aged care facility in 6 years’ time. But you are too wealthy to qualify for subsidised home care. However, can your children use your POA to put a lot of your assets into their names? And then you qualify. Can the children do this under your POA?

The answer again is no. The children must act in the parent’s best interest under the POAs. Stealing their father’s assets is of no benefit to their father and is not acting in his best interest. 

Buy a Ferrari using Mum’s POA?

You and your mother dislike each other. You hold her POA. Your mother is of unsound mind and needs medical treatment. She is unable to drive a car. Despite your relationship, you decide to drive her to the hospital. Can you use your mum’s POA to buy yourself a Ferrari using her money?

poa elder abuse stealing money using a poa in australia

Driving your mother to the hospital is acting in her best interests. Your mother is receiving benefits from your purchase of the Ferrari. (Obviously, you hold the Ferrari as bare trustee for your mum. After all, it is always her asset.)

A person holding a POA must act in the donor’s best interest. Driving your Mum to the hospital is in her best interests. And you need a car. And you may need to get there fast. So a Ferrari may be an acceptable purchase under Mum’s POA.

The Court in BJL (Guardianship) [2018] VCAT 142  stated:

“It is in the nature of a family trust that family members are appointed. It is also natural and common that persons appoint close family members as their attorneys. Conflict between the roles in such circumstances must be demonstrated not assumed. To conclude otherwise would mean that in every circumstance where a family member holds: (i) one role in a family trust and (ii) another role as an attorney for a family member who is a beneficiary of that trust – there is a disqualifying conflict of interests. This would implicate a great many persons’ estates.”

A POA is only used to protect the person that made the POA

So the POA cannot be used to save a child’s life and it cannot be used to save tax. But it can be used so that a child can swan around in a Ferrari!

Your attorney must act honestly and with reasonable diligence

Your POA attorneys must exercise the powers given to them:

  • according to the terms of the enduring power of attorney;
  • honestly; and
  • with reasonable diligence

to protect your interests.

The Queensland provision creates a criminal offence as well as a right in the maker to seek compensation for losses caused by the enduring attorney’s failure to exercise their powers honestly and with due diligence. See Powers of Attorney Act 1998 (Qld) s 66 and Moylan v Richards [2010] QSC 327.

In South Australia and Western Australia, the legislation requires an enduring attorney to exercise their powers with reasonable diligence to protect the interests of the maker and makes them liable to the maker for any loss caused by their failure to do so.

In Tasmania, an enduring attorney is taken to be a trustee of the property and affairs of the maker according to the terms of the power of attorney and must exercise their powers to protect the interests of the maker. See Powers of Attorney Act 2000 (Tas) s 32A(1).

In Victoria, an enduring attorney must act honestly, diligently and in good faith. They must also exercise reasonable skill and care.

In the Northern Territory, a person appointed in an advance personal plan as a decision-maker for financial matters under the Advance Personal Planning Act (NT) is required to act honestly and with care, skill and diligence.

So that leaves NSW and the ACT. Their legislation has no requirement for your attorney to act honestly or with reasonable diligence. But this can be inferred in the intent of the legislation.

Did the daughter steal $120,000 from her mum?

I want to you consider these facts. I want you to consider what you could have done in your own family to reduce the chance of getting into this mess. Win or lose the daughter and her family suffered by having to go to court.

These are criminal charges (not civil) laid against the daughter.

Daughter risking jail for alleged theft of $120,000 from sick mother

A daughter is accused of stealing $120,000. This is from her Alzheimer’s-affected mother. The daughter spent thousands of dollars on event tickets, dinners at Crown and jewellery. This is what the District Court was told.

Abuse of an enduring Power of Attorney

Siham Carollisen, 33, is on trial for misusing a Power of Attorney (or more correctly an Admin order). She pleads not guilty to stealing money using the POA.

State prosecutor Mr Ryan Arndt said the money the daughter spent on herself was supposed to be reserved for her mother’s living expenses.

“She treated it as if it were her own money,” he said.

The daughter transferred her mother’s $270,000 share from the sale of the family home to an account in her name.

But this money was almost all gone by June 2015. Mr Arndt said there was “seemingly nothing to show for $270,000”.

The Mum gets Alzheimer’s.

The daughter argued that her mother gave permission to spend $275,000. This includes the $120,000 she is accused of stealing.

Under cross-examination, the daughter (a mother of two) admits she got massages for herself using Mum’s money.

Daughter cleared of stealing $120,000 from mother with Alzheimer’s

The decision? The daughter walks free from the District Court. This is after a jury took just 9 minutes to find her not guilty of stealing $120,000 from Mum.

She cries when the verdict is read out.

Lessons to learn when holding a POA

The daughter escapes this time. But it put a huge strain on her and her family. POAs and looking after people’s money come with huge responsibilities. You have to act in the person’s best interest. That is a difficult and subjective burden.

Responsibilities of attorneys under a POA

What happens when the person making a POA loses the capacity? This is often a permanent situation.

The enduring attorney is then your manager and decision-maker. This is for your financial affairs.

The relationship is one of principal and agent. But upon the loss of your mental capacity, you, as the principal lose the capacity to sack your agent.

At that point, Legal Consolidated, believes the fiduciary (of utmost good faith) obligations are increased.

The person now holding your enduring POA has a high level of ethical responsibility. Some are set out in each state’s legislation. Others are set by the common law.

Queensland legislation gives us the greatest help in how an attorney should carry out their responsibilities. See Powers of Attorney Act 1998 (Qld). Legal Consolidated holds the view that all Australian POAs attorneys should uphold Queensland obligations. It would be foolish and risky not to.

Loans to Children

Can your Attorney disregard things you have told them?

For an enduring power of attorney, you may give binding instructions to your attorney. But only when you are still of sound mind.

However, just because you are of unsound mind does not free up the attorney to start looking at what is in your best interest afresh. For example, if you are Catholic and have made your views known the attorney is not free to disregard that knowledge in working out what is in your best interests.

Acting against your instructions is a breach of trust by the attorney. Consider the High Court of Admiralty in England’s decision in The Margaret Mitchell (1858) 166 ER 1174. The attorney sold a ship. But it was contrary to instructions. These instructions were not in the POA but they could not be disregarded. Dr Lushington J stated:

I apprehend that, as a general rule, the grantee of a power of attorney is bound to follow the directions and wishes of the grantor, as, for instance, with respect to the power of attorney to sell stockthe grantee must exercise that power according to the orders of the grantor. I conceive that to use a power of attorney contrary to the known wishes and directions of the grantor, is a breach of trust.

This approach is adopted in Victoria in 1983 and 2002 and 2004 in New South Wales. See Watson v Watson [2002] NSWSC 919, [49] and Dynayski v Grant [2004] NSWSC 1187, [19].

In R v Holt, Tadgell J of the Supreme Court of Victoria stated:

It is not the law that an attorney given power by instrument under seal may, so long as the instrument remains unrevoked, exercise the power it confers in disregard of any subsequent orders of his principal conveyed to him …  there always resides in the donor the right later to instruct the donee not to act on the power, or to act only in a stated way. That the effect of a power of attorney, even if given under seal, may be modified by parole [verbally] is made clear by the decision of The Margaret Mitchell the authority of which has so far as I am aware never been doubted.

While I am of sound mind can the POA be used against me?

In the Supreme Court of South Australia, Judge Burley, clearly states that an attorney under an enduring power of attorney may not exercise powers conferred by the grant contrary to your wishes. This is when you have the mental capacity to give your attorney such directions. Even your verbal instructions must be followed.

Should your POA attorney still listen to you, even if you are of unsound mind?

You may have lost ‘mental capacity’, whatever that means, but your attorneys should still hear your views. This is if you wish to share them.

But the attorneys may not follow what an insane person wants. This is especially the case if it places the attorney in breach of their obligation to act with proper care and protection.

The Queensland and the ACT legislation encourages self-reliance. This includes giving the now incapable maker the necessary support and information. This is to participate in the making of financial decisions affecting their lives.

Similarly, Victorian legislation requires your attorney to keep you involved in the decision-making about your finances. This is even after your decision-making ability is absent or impaired.

While other states and the NT do not enshrine this right in their legislation best practice is to listen and give the maker of the POA the right to be heard.

Six ways to protect yourself when holding a POA:

  1. Never put the donor’s assets in your own name. This is unless the assets are clearly held by a fully written legally prepared trust or bare trust, and only if the accountant has checked this first.
  2. Get your accountant and financial planner to sign off to say that what you propose is in the Donor’s best interest. (E.g. This investment strategy is best because ….     You need to sell the family home because it is now subject to CGT and land tax because …)
  3. If you have siblings, get your parents to appoint more than one child to hold the Enduring POA.
  4. Discuss everything you propose to do with all your siblings.
  5. Get your accountant to keep records and a trail of where all the money goes
  6. Don’t use any of the money for your personal enjoyment. Pay for your own massages.

28% of POAs built on a government website do not work

You can see the complex nature of POAs. Further, over 28% of POAs are incorrectly drafted and don’t work. About 13% of POAs prepared by lawyers do not work. So:

  1. Build your POA on our website.
  2. Speak to your accountant and financial planner before you use a POA to purchase something. This is if the person that gave you the POA is now of unsound mind.


Article written by Adj Professor, Dr Brett Davies and UWA Juris Doctor candidate Adam Cajaglis