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Mum's Attorney sold her house

November 3, 2016

Under an Enduring Power of Attorney, the attorney’s primary responsibility is to do what is necessary to provide care and support to the person during their lifetime.

 

If the power provided to the attorney allows them to deal with the person’s assets without limitation, then the attorney may sell their assets during their lifetime. This includes any assets specifically gifted to beneficiaries under the terms of the person’s Will.

 

For example, in order to fund the person’s entry into a nursing home, the attorney may sell property, even if it has been gifted under the person’s Will.

 

So, where does this leave the beneficiary of an asset that has been sold by the attorney during the person’s lifetime?

 

There are two conflicting views:

 

  1. the gift under the person’s Will fails, as it is not an asset of their estate at the time of their death; or

  2. the beneficiary is entitled to the balance of sale proceeds, if any, remaining from the sale of the asset.

 

Both positions have been tried before the Courts in Queensland, creating some doubt as to how an Executor should deal with circumstances such as these.

 

Where a gifted asset has been sold by an attorney, the Powers of Attorney Act 1998 gives a beneficiary the right to apply to the Court for compensation for the loss of the benefit of the gift. The beneficiary must first make an application to the Court before they obtain an Order in their favour.

 

How can I stop this from happening?

 

  • When making a Will with specific gifts to beneficiaries, it is important to consider what will happen if that asset is sold during your lifetime.

  • If you are an attorney considering selling assets of the person you act for, you should obtain a copy of their Will so that you are aware of any gifts that may be affected by the sale.

 

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