ARE YOU SELLING A PROPERTY UNDER A POWER OF ATTORNEY?
Consequences of Selling your Property under a Power of Attorney
Update
- Selling property under a Power of Attorney executed before 16 February 2004 will affect your ability to gift property in your will.
- You should ensure that you check the date of execution of your Power of Attorney before proceeding with the sale or you may face unexpected consequences.
Rule of Ademption
- Prior to the introduction of the Powers of Attorney Act 2003 (NSW) property sold under a Power of Attorney was subject to the common law principle of ademption.
- Ademption occurs when property gifted under a will is no longer in the will maker’s estate when they die, and so cannot pass to the beneficiary on death.
Exception to the Rule
- Section 22 (1) of thePowers of Attorney Act 2003 (NSW) now overcomes this problem by creating an exception to the rule.
- Where property is sold under a Power of Attorney the beneficiary of that property under the will, will be able to retain the interest in the proceeds of the sale.
HOWEVER
- This exception only applies to Powers of Attorney executed after 16 FEBRUARY 2004.
What does this all mean?
- If property is sold under a power of attorney executed priorto 16 February 2004, a gift of that property will fail. This means your beneficiary will not be able to receive anything under your will.
- If property is sold under a power of attorney executed after16 February 2004, the beneficiary of that property will be able to retain the interest in the proceeds of the sale.
What should you do?
- Provide a copy of your Power of Attorney to your Agent and Legal Practitioner prior to the sale of the property.
- Check that your Power of Attorney is executed after 16 February 2004.
- If executed prior to 16 February 2004, consider having a new Power of Attorney granted.
- Seek legal advice if your Power of Attorney was executed prior to 16 February 2004 or if a new Power of Attorney cannot be granted.
Should you have any concerns about your Power of Attorney please do not hesitate to contact us on (02) 9267 6263.
Disclaimer: The information in this article is correct as at 26 March 2015. This information is not to be taken as legal advice and at all times we recommend you seek independent legal advice regarding your own individual circumstances for your legal representative.
For further information, please contact:
Elizabeth Pecipajkovski Solicitor Phone: (02) 9267 6263 Email: Elizabeth@jemfish.com.au
Greg Jemmeson Partner Phone: (02) 9267 6263 Email: Greg@jemfish.com.au