WA Power of Attorney - Signing Loan as Both Lender and Borrower?

[SDSPerth]

Hi

I have power of attorney granted by my father.

He is no longer of sound mind and I need to lend him some money for residential care. Can I sign a loan to him as both lender and borrower (on his behalf)?

I will not be charging him interest, and the loan is for his benefit, so I was hoping I was on safe legal ground.

 

[Rob Legat - SBPL]

I'm guessing you're in WA based on your name. WA law may differ from the below, as this area is state based and I only practise in Queensland.

There are a few issues here:

- Is the power of attorney 'enduring'? If not, it most likely ceased when your father became of unsound mind;

- Does the power of attorney allow you to make financial decisions? If not, then you can't;

- In most instances, attorneys have a requirement to avoid a conflict of interest and to keep their property separate from that of the principal. This would normally stop you from making a loan to your principal - particularly if you are intending to sign on his behalf;

- However, if you are not making any charge for the loan, and it is for his benefit, you may likely find that you are on safe ground because attorney's generally have a right to reimbursement for expenses incurred on the principal's behalf. This is not fundamentally different;

- Be aware, though, that the manner in which you take repayment of the loan may cause the principal hardship if you leave him without sufficient funds to maintain his living standards. Doing so may be a breach of your duties as attorney.