Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 23 January 2016.
In her later years, Jane starts to have difficulty managing her financial affairs. She had not considered this earlier and had failed to execute a power of attorney. Her son, Matthew, successfully applies to the Guardianship Tribunal for an order that he be appointed as Jane’s financial manager.
Unfortunately, Jane’s home is destroyed by fire and she receives a substantial payout from her insurer.
Jane moves in with Matthew and he assumes control of her bank account which includes the substantial payout.
When Jane dies, her other son, Jack, who is appointed as her executor, discovers that Matthew had transferred a lump sum of $120,000 into his own account and that there were other payments made for his benefit, totalling an additional $100,000.
When Matthew refuses to repay the money, claiming that the funds were gifted to him, Jack seeks an order from the court. The court states that a financial manager is not usually liable to account, but in the circumstances, Matthew had no power to make the payment to himself. The court also states that the payment was a clear breach of Matthew’s “fiduciary” duty as his mother’s financial manager.
After examining the bank statements in question, the court found that some of the funds that Matthew had allegedly misappropriated, were in fact used for his mother’s benefit and that these payments totalled $30,000. Ultimately, the court ordered that Matthew was liable to repay $190,000 to his late mother’s estate.
The court also ordered that Matthew was liable to pay his own legal costs together with Jack’s substantial legal costs.
Although in this case, the funds were able to be recovered, this is not always the case.
It is important that anyone assuming control of your affairs is trustworthy and ideally it is you who decides who this will be. I recommend that this is done by executing an enduring power of attorney.
