Advisers usually plan for a client’s death. Loss of capacity is more common, can last for years, and causes more practical damage to Australian assets. A client with dementia cannot sign a contract of sale, renew a lease, refinance or instruct a bank. If nobody has clear authority in Australia, those assets freeze while expenses, land tax and loan repayments continue.
Will an overseas power of attorney work in Australia?
Often not, or not easily. A Singapore Lasting Power of Attorney, or a power of attorney signed in Malaysia, Indonesia or Hong Kong, may not be accepted by Australian banks or land registries. The rules differ between Australian states, and the institution may insist on Australian-form documents or a court or tribunal order. Even where a foreign document is ultimately recognised, the delay can be significant.
The straightforward answer is for the client to sign an Australian enduring power of attorney while they have capacity, in the form required by the state where the assets are located. It can be signed in Australia or overseas, if the witnessing rules are followed.
If there is no valid power
In Victoria, the family must apply to VCAT (the state tribunal) for the appointment of an administrator for financial matters and, if needed, a guardian for personal matters. This involves medical evidence, notice to family members, and a hearing. Where family members disagree about who should be appointed, the application can become contested, and the tribunal may appoint an independent professional instead. Our firm can act as an independent administrator where that suits the family.
Capacity disputes and financial abuse
RMs are often the first to notice a problem: unusual transfers, a new “adviser”, a child suddenly giving instructions. Under Australian law:
an attorney must act in the principal’s interests, keep their own money separate and keep records;
transactions benefiting the attorney can be challenged;
the tribunal and courts can review, revoke or replace an attorney;
a Will or gift made when the person lacked capacity, or under undue influence, can be set aside.
When families disagree about an ageing parent’s care or money, elder mediation can resolve matters before they reach a tribunal. I am trained in elder mediation and conduct these mediations in English and Mandarin.
A short checklist for advisers
Ask whether the client has an Australian enduring power of attorney for each state where they hold assets.
Check that the attorneys named are still appropriate, willing and able to act in Australia.
Align the Australian document with the client’s home-country power of attorney, so the same people act.
Record the client’s wishes for their Australian property, such as whether it may be sold to fund care.
Make sure the Australian Will is current (see our guide on estates with Australian assets).
Refer a matter. If a client’s capacity is declining and they hold Australian assets, contact Justin Chua for a discreet discussion.
This article is general information only and is not legal advice.
Related reading: Capacity, Ageing Parents and Powers of Attorney, a guide for families protecting elderly members and their wealth.
More notes for private bankers, trustees and family offices: For Private Banks, Trust Companies and Family Offices.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice.
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