After many years of acting as Mary’s accountant, you notice that at the age of 94 she is starting to go ‘downhill’ so, it doesn’t surprise you, when one day you get the call from her only child, Liz (70), telling you Mary’s Enduring Power of Attorney has been activated, and Liz is her attorney. In previous years Mary has often asked you to pay Liz’s rent and other expenses and even though Mary is no longer able to authorise this support, Liz has instructed you that she expects that support to be continued. You know this is also what Mary would have wanted. What do you do? Are your hands tied?
As a professional adviser, you may have been instructed to manage personal wealth matters for clients in a way that benefits not only your client but also their families. Your client, like Mary, may have routinely provided regular financial support to their family – adult children, grandchildren, spouses, or even elderly parents. This support can be informal but deeply entrenched, often continuing for years.
But what happens when your client loses capacity, and their Enduring Power of Attorney (EPOA) takes effect?
Suddenly, you’re no longer dealing with your client, you’re dealing with their attorney. If your client’s attorney asks you to make payments or financial transfers to third parties, such as family members, this puts you in legally sensitive territory.
Why This Matters
A standard EPOA typically authorises the attorney to act in the best interests of the donor only, not their family or other third parties. This is what is known as a fiduciary duty. Even, if the donor historically provided generous financial support to loved ones, those past actions don’t automatically authorise the attorney to continue them.
What You Should Consider Before Acting
If you are asked by an attorney to provide financial support or make payments to someone other than the donor, stop and assess:
Is the request aligned with the donor’s best interests? An attorney is legally obligated to act solely in the donor’s interests, not in the interests of third parties, even family and especially not themselves.
Does the EPOA explicitly authorise third-party gifts or support? If you’re being asked to make payments to anyone other than the donor, you should look for clear, written authority in the EPOA. Without it, you risk acting outside the bounds of your authority and could be exposed to liability.
Does the law allow “reasonable gifts” or customary payments? Some jurisdictions do permit limited gifting, but the circumstances are narrow, for example, in the ACT, section 39 of the Powers of Attorney Act 2006 permits gifts for special occasions (like birthdays or weddings) or charitable donations, provided they are modest and consistent with what the donor might have given when they had capacity. Queensland has similar provisions.
These are not blanket permissions for ongoing financial support. Large or recurring payments to adult children, for example, would likely require express authorisation.
Are you, as a third party, exposed to risk? Yes. If you’re following instructions from an attorney without verifying the legal authority to make third-party distributions, you could be seen as facilitating a breach of fiduciary duty – or worse, elder financial abuse.
Do you suspect undue influence or misuse of the EPOA? If the request feels inconsistent with your knowledge of the client’s intentions or values, trust your instincts. You have a duty to question and, if necessary, escalate.
Don’t Wait for a Crisis: Plan Proactively
This kind of issue can often be avoided altogether. Next time you ask your client whether they have their estate planning sorted, pay a bit more attention to the instructions (if any) they have given in their EPOA. Read this article which goes into the issue in more detail.
In short, review your client’s existing EPOA and ask, does it reflect their current family situation and financial support intentions?
If you have a client like Mary, are there any provisions or express directions authorising you to continue making gifts or support payments if she loses capacity?
If the answer is no, or unclear, it may be time to recommend a customised EPOA. A well-drafted EPOA can include specific provisions allowing continued support for particular individuals or causes, aligning the legal authority with the client’s expectations.
How we can help
This isn’t something you should navigate by yourself. If you’re uncertain about the legality of an attorney’s instruction, or suspect misuse, it’s critical to pause and seek legal advice.
If you think your clients might benefit from a customised EPOA so you can continue to help their family in the way they wish, we can help.
Call us on 1300 654 590 or email us and connect with a specialist who can help you.
The information contained in this post is current at the date of editing – 29 August 2025.
