Australia: Enduring Powers of Attorney - issues for superannuation fund trustees

Superannuation Update
Last Updated: 12 December 2012
Article by Heather Gray


Every comprehensive estate planning exercise includes (or should include) the preparation of powers of attorney (POAs). It should also include a consideration of how superannuation interests will be managed, not only after the member's death, but also during their lifetime should they lose legal capacity. Changes to the rules over the past several years have meant that, for most fund members, the optimum strategy will involve keeping balances in superannuation for as long as possible, and drawing an income stream. As the population ages, this will inevitably mean that more and more superannuation fund trustees will be faced with the issues that arise when an attorney seeks to exercise their powers in relation to the principal's (fund member's) superannuation.

First, trustees will need to consider whether, on its face, a POA that is presented is validly made and is of the correct type. To a large extent, this aspect can be handled through the use of systems and checklists.

Second, however, and presenting far more challenges, trustees may need to decide whether the action the attorney seeks to take is one that can properly be taken in reliance on the particular POA. For example, what should a trustee do if an adult child appointed as their parent's attorney seeks to revoke a binding death benefit nomination (BDBN) made in favour of the parent's spouse or another child, and to replace it with a BDBN in favour of the child themselves? Surely such a circumstance portends family arguments, complaints, and possibly the involvement of the Superannuation Complaints Tribunal (SCT) and of the courts.

This article outlines some of the matters trustees should take into account when establishing their procedures for dealing with POAs, and when considering which actions they will and will not allow.


There are several types of POA (not all applicable in every jurisdiction), the main types being:

  • A general power of attorney, under which the principal appoints the attorney to undertake specific responsibilities (a general power of attorney ceases to have effect once the principal loses legal capacity)
  • An enduring power of attorney (medical treatment) (or similar) under which the principal appoints a person to make decisions about their medical treatment in the event that the principal cannot make those decisions for themselves
  • An appointment of enduring guardian under which the principal appoints a person to make certain lifestyle decisions for the principal if they cannot make those decisions for themselves
  • An enduring power of attorney (EPOA), under which the principal appoints an attorney to do anything that the principal can lawfully authorise an attorney to do (subject to any limitations expressed in the document). An EPOA can therefore extend to any decisions and actions relating to the legal and financial affairs of the principal. Importantly, it continues to be effective even if the principal loses legal capacity. This is the type of POA relevant in the superannuation context.


Formal requirements for an EPOA

Each Australian jurisdiction has legislation that governs the making and the operation of EPOAs.1 The rules vary significantly between jurisdictions, and any checklists used in assessing formal compliance must incorporate the rules for each place. An EPOA must be made in the relevant approved form in order to be effective (although minor variations are generally acceptable).

Each jurisdiction has specific requirements as to signing and witnessing. In Victoria (which is reasonably indicative):

  • An EPOA must be signed:
    • By the principal; or
    • by another person by direction, and in the presence, of the principal
  • An EPOA must be signed and dated by two adult witnesses in the presence of the principal and each other. There are specific requirements in each jurisdiction as to who can be a witness. In Victoria, one of the witnesses must be a person who is authorised to witness a statutory declaration
  • The EPOA must also contain a certificate signed by each witness which states that the principal signed the EPOA freely and voluntarily in the presence of the witness, and that at the time of the signing, the principal appeared to the witness to have the capacity necessary to make the EPOA
  • The attorney or attorneys who are appointed under the EPOA must formally accept that appointment in writing.

The overall content of an EPOA is dictated by the statute under which it is made, but generally must include the following:

  • The full name and address of the principal, the attorney(s) and any alternative attorney(s)
  • Either a statement that the attorney(s) is or are authorised to do on the principal's behalf anything that the principal may lawfully authorise the attorney(s) to do, or a statement of the conditions, limitations and instructions that apply to the appointment; for example, if a principal wants their EPOA to take effect only if they become legally incapable, the EPOA document should include a clear statement as to how "legal incapacity" is to be assessed (eg a certificate from a general practitioner may be required)
  • A statement as to when the EPOA commences
  • A declaration that the EPOA will continue to be effective even if the principal becomes legally incapable
  • Witnessing provisions.

A trustee should not accept an EPOA which, on its face, does not meet the formal requirements.

Capacity of the principal

A trustee presented with an EPOA is of course most unlikely to know whether or not the fund member who has signed it had legal capacity at that time. However, trustees may nonetheless become embroiled in arguments over this issue, such as where disputing family members submit that a trustee should not give effect to actions initiated by a fund member's attorney on the basis that the member lacked legal capacity at the time of signing the EPOA.

The standard of mental capacity required for making an EPOA is high. This is because the principal is giving to their attorney the power to make far-reaching decisions and to take actions affecting their financial and legal affairs, and these powers will continue (unless previously revoked) even after the principal has lost legal capacity. The decided cases are somewhat inconsistent as to exactly what is required when the standard is applied in the EPOA context, but some Australian jurisdictions have introduced legislation to address the issue. In Victoria (which again is reasonably indicative), the principal is required to understand the nature and effect of the EPOA, and the statute includes a number of indicia of such understanding.2

An EPOA will be void if the principal lacked the necessary capacity at the time of making the EPOA. This in turn means that everything done under that EPOA is also void. However, the relevant statutes offer protection for attorneys and third persons who acted in good faith and were not aware that an EPOA was void, and trustees will generally be able to rely on those provisions.3 An exception might, however, exist if the trustee knew that the relevant fund member lacked legal capacity (for example, because a total and permanent disability claim had been lodged on the member's behalf prior to the date of the EPOA, including medical evidence thatthe member had suffered a catastrophic brain injury). In practice, of course, such situations would be very rare, and trustees should as far as possible leave capacity issues to be argued as between the relevant disputants.


An attorney can only do those things that the principal can lawfully authorise an attorney to do. There are some things that must be done personally, and cannot be done on the individual's behalf by an attorney. These things include:

  • Acting as a trustee (although note that there are limited statutory exceptions to this rule)
  • Acting as a directo4
  • Making a will (legislation in each jurisdiction makes provision for the court to make a will for a person who is incapable of doing so themselves)
  • Getting married or divorced
  • Voting
  • Swearing an affidavit as to the principal's personal knowledge
  • Acts which the principal is contractually bound to perform personally
  • Acts which a relevant statute requires be done personally.


An attorney must follow the directions and wishes of the principal as set out in the EPOA, as well as following any other terms set out in the EPOA. Unless the EPOA specifically provides otherwise, an attorney is not obliged to consult with the principal before acting under the EPOA.

Since the relationship between principal and attorney is one of agency, the courts have generally treated this relationship as a fiduciary one. The main duties of an attorney are therefore:

  • To act in the best interests of the principal (put another way, to act with undivided loyalty to the principal)
  • To avoid conflicts or potential conflicts between the principal's interests and the interests of the attorney or a third party without the principal's informed consent
  • Not to make any unauthorised profit out of the attorney's position (in other words, not to benefit themselves).

"Informed consent" has been held to mean "full and complete disclosure by the attorney to the principal of all material facts pertaining to the conflict of interest".5

Some of the general law principles are repeated in the relevant legislation (for example, the Powers of Attorney Act 2003 (NSW) (s 12) states expressly that a power of attorney does not authorise an attorney to do something to benefit themselves unless the instrument expressly allows this).

If an attorney acts contrary to these duties, they may face serious consequences. If an attorney does something under the EPOA to benefit themselves (without authority), then the principal may elect to have the transaction set aside and to recover the relevant property. If the attorney has wrongly transferred property to an innocent third party, then the principal is generally entitled to recover against the attorney.

Again, trustees may need to rely on the protections afforded by statute to persons who act in good faith and without knowledge of invalidity in reliance on an attorney's purported exercise of a power. The law does, however, contemplate that the principal might include provisions in the EPOA allowing the attorney to do things that they would not otherwise be able to do because of the operation of these principles. In that event, the attorney is entitled to act in accordance with these special provisions. Clearly, the existence of express provisions dealing with particular acts that an attorney might seek to carry out will be of great assistance to trustees who need to decide whether to give effect to a purported action by an attorney.


Types of actions

There is a range of actions that might fall to be addressed by an attorney acting for a fund member in reliance on an EPOA. These could include:

  • Making a contribution and lodging, if applicable, a notice of intention to deduct that contribution
  • Withdrawing a benefit
  • Rolling over or transferring benefits to another fund
  • Commencing or ceasing a pension
  • Changing a reversionary beneficiary
  • Varying pension payments
  • Selecting an investment option
  • Making, revoking or varying a BDBN.

The most difficult challenges for trustees arise where the attorney is seeking to rely on an EPOA to do something that, on its face, would seem to create a conflict with the attorney's duties.

Making or changing BDBNs

In the example given at the beginning of this article, an adult child sought to revoke their parent's BDBN made in favour of the parent's spouse or another child, and to replace it with a BDBN in favour of themselves. This raises obvious issues as to whether the child is acting in their own interests, and therefore acting in breach of their most fundamental duties as an attorney. It is not difficult to construct other scenarios in which immediate questions would arise for a trustee confronted with purported actions by an attorney in relation to their principal's BDBN.

Whether, and to what extent, an attorney can make, revoke, confirm or amend a BDBN is a matter of some debate.

It is sometimes argued that the making of a BDBN is an act that must be done personally (and therefore could not be done by an attorney under an EPOA). On balance, the author's view is that a court is likely to be persuaded that there is nothing in the superannuation legislation or elsewhere that would compel such a conclusion. This was the approach adopted in SCT Determination No. D07- 08\030, in which the SCT acknowledged that:

"... the Enduring Power of Attorney would have permitted the Complainant to complete and sign the Binding Death Benefit Nomination."

It seems, however, that the SCT has not had to consider the effectiveness of an action taken in relation to a BDBN by an attorney relying on an EPOA where this was central to the complaint. Further, the courts have not been called upon to consider this issue. Trustees, therefore, must negotiate this area of doubt without the aid of binding precedent specific to the superannuation context.

Where an attorney seeks, for example, to make a BDBN on behalf of their principal in favour of themselves, or to revoke a BDBN in favour of a person other than themselves, it seems possible, if not likely, that the SCT or a court would accept an argument from a disappointed beneficiary that the attorney's action was not authorised by the EPOA, as it provides a benefit to the attorney. A trustee which had allowed an attorney to take such action might then face considerable complexity as regards the "unwinding" of the action, particularly if death benefits had already been paid. Trustees may therefore prefer not to allow such actions to be taken by attorneys in reliance on EPOAs.

Given these difficulties, advisers may suggest that a principal who intends that their attorney should be free to "deal" with BDBNs however they think fit, including taking action likely to result in benefit to themselves, should include in the EPOA wording that makes it clear that such steps are within the attorney's authority. In time, trustees may need to consider whether they will provide "approved" wording for inclusion in such EPOAs, or will confirm ahead of time whether such wording would be adequate for the trustee's purposes.

Exercise of other member rights

Exercising many of the other member rights referred to above will not require actions that create obvious conflicts, or that will lead to a benefit being conferred on the attorney. For example, a change to an investment option on behalf of a fund member by their attorney is unlikely to be problematic. Nonetheless, other actions, depending on the relevant circumstances, may raise concerns similar to those described in the context of BDBNs. For example, the replacement or removal of a reversionary beneficiary may cause the attorney to be benefited as the newly nominated beneficiary, or as a person who might receive a death benefit in the absence of a reversionary who has been removed. Again, therefore, trustees will need to consider whether they will decline to allow such actions in reliance on an EPOA unless the EPOA includes wording expressly allowing the attorney to act in this way.


EPOAs are an important part of every person's planning for the management of their affairs, including their superannuation. From a trustee's perspective, however, they can raise significant difficulties where they are relied upon in anything but the most straightforward of situations. Trustees may need to develop policies and procedures regarding the acceptance (or otherwise) of actions by attorneys in reliance on fund members' EPOAs, to ensure that proper considerations are taken into account.


1 Powers of Attorney Act 2006 (ACT); Powers of Attorney Act 2003 (NSW); Powers of Attorney Act 1980 (NT); Powers of Attorney Act 1998 (Qld); Powers of Attorney and Agency Act 1984 (SA); Powers of Attorney Act 2000 (Tas); Instruments Act 1958 (Vic); Guardianship and Administration Act 1990 (WA).
2 Section 118 of the Instruments Act 1958 (Vic).
3 Powers of Attorney Act 2006 (ACT) (ss 72 and 73), Powers of Attorney Act 2003 (NSW) (ss 47 and 48), Powers of Attorney Act 1980 (NT) (ss 20 and 21), Powers of Attorney Act 1998 (Qld) (ss 98 and 99), Powers of Attorney and Agency Act 1984 (SA) (s 12), Powers of Attorney Act 2000 (Tas) (ss 28, 51 and 52), Instruments Act 1958 (Vic) (s 125U).
4 Mancini v Mancini (1999) 17 ACLC 1570 at [1577]–[1578].
5 Baillie v Charman (1992) 94 DLR (4th) 403 at 412 per Toy JA (CA(BC)).

© DLA Piper

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DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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