As our family, friends and peers decline, who makes decisions about their financial matters if they lose capacity?
Adult individuals (the “Principal”) can legally appoint others to act as their financial decision makers by way of an Enduring Power of Attorney document. This document allows the appointed person (the “Attorney”) to manage financial and property matters and can be tailored to include broad or restrictive powers.
The Principal can choose when the document comes into effect. It may come into effect immediately, on the Principal’s loss of capacity or at a specified time.
The Enduring Power of Attorney operates during the Principal’s lifetime. Once the Principal dies, the document ceases to have effect, and their Will (if one exists) comes into effect.
What happens if an individual becomes incapacitated without this document in place?
Let’s say Sarah loses capacity without appointing an Attorney. Any person that wants to assist Sarah with her financial decision making will be required to apply to the NSW Civil and Administrative Tribunal (NCAT) to become her financial manager.
NCAT would then assess the application and decide if the appointment is appropriate and required. NCAT ultimately decides on either making the appointment or denying the appointment. This process carries significant risk as the person seeking appointment may not have been Sarah’s first, second or even third preference.
Where multiple applicants are not on the same page as to who should be appointed for Sarah or, where NCAT does not believe an applicant is an appropriate financial decision maker, NCAT may appoint New South Wales Trustee & Guardian as Sarah’s financial manager.
The process of having a financial manager appointed can be protracted with lengthy waits to receive a hearing date causing delay in financial decision making for Sarah.
Had Sarah prepared an Enduring Power of Attorney during her lifetime, there would be a degree of comfort in knowing her nominated decision makers and directions would be honoured.
Navigating estate planning is not as straightforward as it may appear when you are approaching it solo. You don’t have to do it alone. At Hitch, we provide clear solutions to complex circumstances that are tailored to your personal circumstances. Our experienced team is here to help ensure that your wishes are documented and protected. Planning ahead not only gives you peace of mind but also safeguards your well-being.