Abuse of power of attorney: what are my legal options? January 21, 2025

Attorney misconduct is a serious issue requiring decisive action to protect the principal and their assets

Abuse of a power of attorney is a serious issue, especially because it can be so closely related to elder abuse. Whether you’re a principal or an interested third party, understanding your rights and acting quickly can make a significant difference to the outcome. Here’s what you need to know.

What is a power of attorney?

A power of attorney is an important legal document in which a person (the principal) gives someone else (the attorney) authority to act on their behalf for their decisions. It can be used when the principal can’t make decisions. There are many reasons why the principal may not be able to make decisions, including:

• In the event they become unable to make or understand a decision (for example, due to dementia or another disability)
• In the event they become seriously ill, unconscious or are in a coma
• When they’re travelling in another country or out of communication.

Different types of powers of attorney can be used depending on the circumstances. For example:

• An enduring power of attorney is used for decisions about general financial matters or personal matters such as managing the principal’s money, paying bills or deciding where the principal will live; and 
• A general non-enduring power of attorney gives the attorney authority to do a specific thing or for a specific time, for example, paying the principal’s bills while they’re overseas.  

Our article, Should I have a power of attorney? discusses the different powers of attorney in more detail.

When appointing an attorney, the principal should choose someone they trust and who knows them well enough to understand what the principal would want if they could make decisions for themselves. 

The attorney must be an adult capable of making legal decisions.

What are the attorney’s legal obligations? 

In Victoria, the Powers of Attorney Act sets out the attorney’s legal obligations. 

For enduring powers of attorney, they must:

• Act honestly, to their best ability and with good intentions
• Use reasonable skill and care
• Avoid conflicts of interest (except in certain circumstances)
• Keep accurate records and accounts of how they manage the principal’s personal and financial affairs.

They must not:

• Use their position for profit or commercial gain (except in certain circumstances)
• Disclose the principal’s confidential information unless authorised or required by law.

The attorney isn’t entitled to payment for their services unless the power of attorney document authorises payment or unless required by law.

What happens when an attorney doesn’t meet their legal obligations?  

The situation is serious if an attorney abuses their position because they’re not meeting their legal obligations. There are many ways this could happen, but some examples are:

• Using the principal’s money to pay personal debts
• Investing the principal’s money in a scheme that’s likely to fail
• Transferring the principal’s house into the attorney’s name.

Principals are often vulnerable, so attorneys must act with the utmost care and honesty. For example, older people sometimes need to appoint attorneys to help manage their affairs. However, an attorney who isn’t acting in the best interest of an older principal may be committing elder abuse.

There is often a close relationship between abuse of the power of attorney and elder abuse. 

What can I do if I’m the principal and suspect abuse of the power of attorney?

If you’ve appointed an attorney and are worried about their behaviour, you can take action if you still have the legal capacity to make decisions. This means you understand what decision you want to make, the effect of that decision, and any legal obligations.

You must act urgently. The longer the situation continues, the greater the risk to you and your assets. 

For enduring powers of attorney, you must complete a form that revokes (cancels) it. You can cancel:

• the entire enduring power of attorney; or
• the appointment of the attorney (or alternative attorney).

The form must be signed by two independent witnesses (people unrelated to you or your attorney, and not your carer). 

Then, urgently contact your bank and any other financial institutions, businesses or healthcare workers who may have a copy of your power of attorney document. You need to give them a copy of the revocation and ensure they understand the person is no longer authorised to act as your attorney. 

If you own real estate, you may need to arrange an urgent caveat over your property to stop it from being sold without your consent. We recommend you contact us immediately so we can manage this process.

You also need to check all your assets to work out if you’ve lost anything due to the attorney’s misconduct. If you have, you can apply to the Victorian Civil and Administrative Tribunal (VCAT) for orders that may include suspending, cancelling, or varying an attorney’s appointment. 

VCAT can also decide whether the attorney should be held responsible for their actions. It may order the attorney to compensate you for any loss arising from the misconduct. VCAT can also decide whether the attorney’s activities are valid, for example, operating your bank account. 

You may need to provide a medical report to VCAT to prove you have the capacity to make decisions for yourself. We can help you make this application. 

What can I do if I suspect someone else’s attorney is abusing their position?

Occasionally, you may become concerned about the actions of someone else’s attorney. In this situation, you are the third party and the principal may be a close relative. You may need to take action, especially if they are vulnerable. For example, if they don’t have the capacity to make decisions or they’re an older person.

It’s sometimes best to talk to the attorney before you take other action. For example, asking the attorney to show records of their activities, such as receipts or bank records. If they refuse, or you’ve looked at the records and still have concerns, you may need to apply to VCAT for orders, such as: 

• Suspending, varying or cancelling the attorney’s appointment
• Deciding whether an attorney’s transaction is valid
• Requiring the attorney to provide accounts or other records 
• Ordering the attorney to pay compensation to the principal for lost assets.

VCAT has broad powers, specifically to protect people who don’t have the capacity to make their own decisions. VCAT is often at the front line of protecting principals.  

It’s critical to act quickly if you suspect the attorney is committing an abuse of the power of attorney. The longer the situation continues, the more the principal’s assets are at risk. 

If you’re concerned about the conduct of your relative’s attorney, we can help you inspect records and make a VCAT application. 

In cases of severe abuse, you may need to report the matter to the police. 

The final word

Abuse of a power of attorney is a serious situation and often indicates elder abuse. Whether you’re the principal or a concerned third party, you must act quickly to avoid asset loss. This can include revoking the power of attorney, caveating a property or applying for VCAT orders (or all these things). However, it’s an unfortunate reality that if the abuse has been long-term, full financial recovery is not always possible. 

Our legal teams have broad experience in powers of attorney, elder law, property law and estate litigation. We can help you understand your options and navigate difficult circumstances. Contact us to learn more about dealing with an abuse of a power of attorney.