Trustee Corporations Association of Australia

Transcription

1 Submissi~rn N. Date Received LA-cA Trustee Crpratins Assciatin f Australia Submissin t Huse f Representatives Legal and Cnstitutinal Affairs Cmmittee Inquiry int Older Peple and the Law Nvember 2006

2 Older Peple and the Law Intrductin The Trustee Crpratins Assciatin f Australia (TCA) is the peak representative bdy fr the statutry trustee crpratins industry in Australia. Our 17 member rganisatins include all f the Public Trustees and the great majrity f the 11 private trustee crpratins (see attachment). Trustee crpratins prvide a wide range f wealth management prducts and services t individual, family and crprate clients. Services include: estate planning ad ministering deceased estates acting as trustee f persnal trusts administering client assets under Pwers fattrney acting as financial manager fr peple unable t lk after their wn affairs administering charitable trusts and fundatins acting as trustee r administratr fr superannuatin funds acting as crprate trustee I custdian fr managed funds, debenture and nte issues, and securitisatin prgrams Each year, ur members: administer abut 11,000 deceased estates manage assets under attrney I agency arrangements r curt rders fr abut 45,000 peple administer ver 1,700 charitable trusts manage abut 20,000 ther trusts We are pleased t ffer cmments t the Cmmittee s Inquiry int Older Peple and the Law, particularly as a cre fcus f ur members business is meeting the needs f the ageing ppulatin. Trustee crpratins have been acting as attrney fr peple lacking capacity fr many years - they are licensed and regulated by State/Territry gvernments, and fluswe Crpratins Assciatin qfaustralia Nvember 2006 I

3 Older Peple and the Law have the necessary expertise and resurces t prperly handle the task. als ffer independence, accuntability, and perpetuity. They This submissin deals with the specific issues f fraud and financial abuse affecting lder Australians, and lks at measures t address these cncerns. Crnments The challenge facing lder peple Fr many elderly peple, managing their financial affairs can becme a challenging and ptentially stressful task. This is particularly s when cmmn cnditins assciated with ageing, such as dementia, are invlved. Cping with this challenge is made mre difficult by the cmplexity f the legal framewrk and the taxatin system (ntwithstanding the initiatives in the Cmmnwealth Gvernment s recent Simpler Super prject). Elderly peple s financial assets these days are increasingly likely t cmprise a greater range f financial prducts than in the past eg: shares, managed funds, and prperty (pssibly including interstate assets such as a investment prperty). hliday huse r Further, peple are living lnger and may need assistance with managing their assets fr quite a few years. This culd place increasing strain n well-intentined family members r carers wh ften assist the elderly with their financial affairs. Whilst errrs r mismanagement may smetimes ccur in thse situatins, the cnsequences might nt be verly detrimental t the wellbeing f the elderly persn invlved. Unfrtunately, deliberate financial abuse and explitatin f the elderly als ccurs. This is f greater cncern as it is likely t have a mre detrimental impact in terms f leaving lder peple withut sufficient funds t maintain a reasnable standard f living during their later years f life. Meeting the challenge It is generally wise fr peple t give early attentin t ways in which their financial assets can be managed and prtected. In terms f reducing ptential financial abuse f lder peple, a Pwer f Attrney is particularly imprtant. Trustee Grpratins Assciatin faustrahia Nvember

4 Older Peple and the Law A general Pwer f Attrney permits a persn (the dnr) t cnfer legal authrity n anther persn (the attrney) t make varius financial (and smetimes ther) decisins n behalf f the dnr - eg while the dnr is verseas fr an extended perid. This pwer ceases t have effect when the dnr revkes it r lses mental capacity. An Enduring Pwer f Attrney (EPA), n the ther hand, remains perative after the dnr lses mental capacity, and thus is a valuable means f ensuring that lder peple s wishes in relatin t their financial affairs cntinue t be carried ut. An EPA is a practical, flexible and relatively cheap instrument, which can be revked r altered whilst ever the dnr has legal capacity. The fact that legislatin cvering pwers f attrney is State I Territry based can add t the cmplexity f managing the financial affairs f lder peple. Hwever, there have been steps taken by the respective gvernments in recent years t strengthen frmal pwer f attrney requirements, achieve greater unifrmity acrss Australia and enhance recgnitin f interstate instruments Recent imprvements Recent imprvements in the requirements relating t the executin and peratin f EPAs have vercme sme f the uncertainties that previusly existed in respect f the creatin and peratin f these instruments. The changes, which generally can be expected t help prtect dnrs, include: prviding infrmatin in the instrument itself aimed at giving the dnr State and Territry gvernments have als develped mdel legislatin cvering the making f a will, anther imprtant instrument that elderly peple in particular shuld prepare. T make a valid will, a persn must: understand that they are making a will, exercise genuine free chice, understand the prperty being dispsed f and the manner f its dispsitin, and be free f mental disrder. Specific legal requirements must be met and precise meaning cnveyed. If the language in the dcument is ambiguus, it may be necessary fr the Curt t prvide judicial interpretatin. Apart frm adding t csts, the utcme may fail t reflect the wishes f the deceased, despite best endeavurs. Thus, prfessinal advice shuld be cnsidered when preparing a will, particularly if the prspective estate is cmplex, r the family situatin invlves a beneficiary, such as a disabled child, with special needs. Trustee Crpratins Assciatin faustrahia Nvember 2006 S

5 Older Peple and the Law a full appreciatin f the nature and imprtance f the dcument, eg: the desirability f the dnr seeking legal advice prir t executin; the fact that the pwer is nt t be used after the dnr s death; specifying cnditins and limitatins that attach t the attrney s pwers; nting that health and lifestyle decisins are made by guardians and nt attrneys; * highlighting that the attrney has a respnsibility t always act in the best interest f the dnr, t keep the attrney s wn mney and prperty separate frm that f the principal, and t keep apprpriate accunts and recrds; it is imprtant that the appinted attrney nt nly be a party trusted by the dnr t handle the fiduciary respnsibilities invlved, but als be cmpetent t d s. the dnr must specify the time that the pwer is t cmmence, ie: frm the time the dcument is executed, frm a certain date; r n a particular event, such as the dnr being deemed t have lst capacity; requiring the dnr t specify whether r nt the attrney can take a benefit (r cnfer a benefit n a third party) and if s, what is t be the extent f that benefit; this avids unlimited access f an attrney t the dnr s assets withut express prir apprval; tighter witness requirements, which aim t ensure that an apprpriate persn attests that the nature and imprtance f the dcument was explained t, and appeared t be understd by, the dnr; the need fr the attrney t frmally accept the appintment; this ensures that the nminated persn is aware that they have been Trustee Crpratins Assciatin faustrahia Nvember

6 Older Peple and the Law nminated, and has the pprtunity t decline. It shuld make it mre likely that a persn suitable and available takes n the rle. Having the attrney s signature n the dcument als assists financial institutins etc in verifying the attrney s identity when the pwer is being used; allwing fr greater recgnitin f EPAs prepared in ther States and Territries. Pssible further imdrvements 1. EPA register There have been suggestins that a central (electrnic) register f EPAs shuld be established. At present, EPAs generally nly need t be registered if the attrney is ging t lease, sell r mrtgage the dnrs huse r, in sme cases, sell I deal in the dnr s shares. Uncertainty abut wh might have been nminated t lk after the financial affairs f a particular persn can cause practical prblems. We are aware f situatins where a persn has lst capacity and an administratr has been appinted by the Curt, nly t later discver that a member trustee crpratin had earlier been appinted by that persn as their attrney under an EPA. Extending registratin t all EPAs wuld seem t ffer ptential benefits in terms f enhanced accuntability fr attrneys and easier mnitring f dealings under EPAs by the authrities. Als, were such a register publicly accessible, the bna fides f an attrney culd be mre readily checked. In ur members experience, many banks and ther institutins have ver-the-tp and I r incnsistent prcesses befre accepting the validity f an EPA. prcess fr being recgnised as the attrney wuld be a useful practical step. A nn-cmpulsry register might be f limited value. A clear Further, if registratin were t be adpted, it shuld be dne n a natinal basis. Cncerns wuld arise with regard t crss-recgnitin and jurisdictin-hpping if EPAs were registered in sme jurisdictins nly. Trustee Crpratins Assciatin faustrahia Nvember

7 On the ther hand, a register system ptentially wuld be very cstly. Older Peple and the Law It culd als raise privacy cncerns. It is pssible that many elderly peple wuld elect t d withut an EPA if they felt that their privacy wuld be cmprmised by registratin. If this were the case, a registratin requirement might prve cunterprductive. We believe that this issue warrants further careful thught and cnsultatin with interested parties. 2. Strengthening reprting by and mnitring f attrneys Whilst attrneys, administratrs and trustees all act in a fiduciary capacity, nly administratrs and trustees are required t invest funds under their cntrl in accrdance with the prudent persn principle, as cdified in the varius reginal Trustee Acts. Cnsideratin might be given t attrneys als being required t manage a dnr s funds in accrdance with that principle. Further, attrneys culd be required t submit regular reprts f their financial dealings under an EPA, eg an annual statement (ur members have fund that there is ften uncertainty n the part f nn-prfessinal attrneys as regards the nature f the recrds they are required t keep). Enhanced mnitring f attrneys might take the frm f auditing the submitted accunts n a randm basis, which culd be expected t help discurage inapprpriate behaviur. Such a step wuld require mre resurces fr the relevant regulatry bdies, and the added csts invlved wuld need t be weighed up against the expected benefits. Sme trustee crpratins already carry ut a similar functin in terms f reviewing the activities f private administratrs appinted by Curts and tribunals in varius circumstances, eg t manage intestacies r the affairs f peple with impaired decisin-making abilities, and wuld be well placed t take n a similar rle in respect f private attrneys. Trustee Crpratins Assciatin faustralia Nveinher

8 Older Peple and the Law Canacity assessment Deciding exactly when a persn has lst their mental capacity is a very difficult issue. This, f curse, is crucial in terms f their legal ability t execute a will r pwer f attrney, r in determining when an EPA shuld be enfrced. Questins that ften arise include: what is cnsidered prf f lss f capacity? can an attrney rely n a GP s certificate r is an experts reprt required? Als, a persn can be legally capable in respect f sme aspects f their affairs but nt thers (eg as in Old). As is the case with ther areas f reginal legislatin, effrts are being made t achieve greater unifrmity f apprach acrss the varius jurisdictins, which wuld be helpful in dealing with many f the issues assciated with the ageing ppulatin. Trustee Crpratins Assciatin faustralia Nvember

9 Older Peple and the Law Attachment Trustee Crpratins Assciatin f Australia Members ANZ Executrs & Trustee Cmpany Ltd Australian Executr Trustees Ltd Elders Trustees Ltd Equity Trustees Ltd Natinal Australia Trustees Ltd Perpetual Ltd Public Trustee fr the ACT Public Trustee New Suth Wales Public Trustee fr the Nrthern Territry The Public Trustee f Queensland Public Trustee Suth Australia The Public Trustee Tasmania Public Trustee Western Australia Sandhurst Trustees Ltd State Trustees Ltd Tasmanian Perpetual Trustees Ltd Trust Cmpany Ltd Trt~stee Crpratins Assciatin faustralia Nvember 2006 I