Few families give much thought to who will manage their parents’ affairs if they become unable to make decisions for themselves. Usually, it is only when something goes wrong that the question arises.
Perhaps Mum has been diagnosed with dementia and is struggling to manage her finances. Dad has suffered a stroke and can no longer deal with the bank. Or an elderly parent needs to move into residential aged care, but the children cannot agree about selling the family home.
These situations can become complicated surprisingly quickly, particularly where there is no Enduring Power of Attorney or Appointment of Enduring Guardian in place.
One of the most common misunderstandings is that being someone’s next of kin automatically gives you the right to make decisions for them.
In New South Wales, that is not generally how the law works.
Can You Make Decisions for a Parent Who Has Dementia?
Consider a situation where an elderly father owns his home and has accumulated considerable savings over his lifetime. Following a diagnosis of dementia, his children become concerned about his ability to manage his money and continue living independently.
One child wants to sell the family home to fund residential aged care. Another believes their father should remain at home with additional support. The third is worried about who has access to his bank accounts.
Each child believes they are doing the right thing. Unfortunately, their father never prepared an Enduring Power of Attorney or appointed an Enduring Guardian.
Who gets to decide what happens next?
The first question is whether their father still has the capacity to make the decision.
A diagnosis of dementia does not, by itself, mean a person has lost decision-making capacity. Someone may have difficulty managing complex financial affairs but remain perfectly capable of deciding where they would like to live or what medical treatment they wish to receive.
Capacity is assessed in relation to the decision being made, and it may fluctuate.
This distinction matters. Family members cannot simply take over another person’s affairs because they believe that person is making unwise decisions.
Where capacity is uncertain, appropriate medical evidence and legal advice may be needed to determine what steps can lawfully be taken.
What Does an Enduring Power of Attorney Allow You to Do?
An Enduring Power of Attorney is one of the most important documents a person can prepare during their lifetime.
It allows you to appoint someone you trust to manage your financial and legal affairs. Depending on the terms of the document, that authority may include operating bank accounts, paying bills, managing investments and dealing with real estate.
Unlike an ordinary Power of Attorney, an Enduring Power of Attorney can continue to operate even after the person who made it loses decision-making capacity.
However, there is an important limitation.
A person must have the necessary legal capacity when making an Enduring Power of Attorney. If that capacity has already been lost, their children cannot simply arrange for the document to be signed on their behalf.
This is one reason why delaying estate planning can create difficulties. A relatively straightforward appointment, made while a person has capacity, may avoid the need for a formal application to appoint a financial manager later.
Who Decides Where an Elderly Parent Lives or What Medical Care They Receive?
Financial decisions are only part of the picture.
In NSW, an Enduring Power of Attorney does not authorise someone to make medical or lifestyle decisions.
Those matters can instead be addressed through an Appointment of Enduring Guardian.
An Enduring Guardian may be given authority to make decisions about accommodation, healthcare, medical treatment and services when the person who appointed them can no longer make those decisions.
Without an Enduring Guardian, NSW law provides a process for identifying a person responsible who may consent to medical or dental treatment. Depending on the circumstances, this could be a spouse, unpaid carer or close relative.
However, that authority is limited. Being the person responsible for medical treatment does not automatically entitle someone to decide where another person must live.
This distinction often becomes important when a family is considering residential aged care, particularly where the person concerned has expressed a wish to remain in their own home.
What Happens When There Is No Power of Attorney And/or Enduring Guardianship? The Role of NCAT
If someone has lost the capacity to manage their affairs and no suitable arrangements exist, it may become necessary to apply to the NSW Civil and Administrative Tribunal (NCAT).
NCAT’s Guardianship Division deals with matters involving adults who may require assistance with decision-making.
Two common applications are:
Financial management orders
These may be made where a person is incapable of managing their financial affairs, there is a need for someone else to manage those affairs, and an order is in their best interests.
Depending on the circumstances, NCAT may appoint a suitable private financial manager, such as a family member, or commit management of the person’s finances to NSW Trustee and Guardian.
Guardianship orders
These concern personal and lifestyle decisions, including accommodation, healthcare and access to services.
NCAT must consider whether the person has a decision-making disability, whether that disability affects their ability to manage themselves, and whether there is a genuine need for a guardian.
A guardianship order is not automatically required simply because a person has dementia or needs assistance in their daily life.
Where existing arrangements are working satisfactorily, or appropriate decisions can be made without a formal order, tribunal intervention may be unnecessary.
What if Family Members Disagree or Suspect Financial Mismanagement?
Not every dispute arises because someone is acting improperly.
Sometimes, siblings simply have different views about what is best for a parent. One may have provided years of unpaid care, while another is concerned about the financial implications of proposed decisions.
Other situations are more serious. There may be concerns that money has been withdrawn without explanation, that an attorney is benefiting personally from financial transactions, or that a vulnerable person’s wishes are being disregarded.
NCAT has jurisdiction to review the making, operation and effect of an Enduring Power of Attorney. Depending on the circumstances, it can make orders concerning the appointment or consider whether financial management arrangements are required.
However, an NCAT application should not necessarily be the first response to a family disagreement.
Before commencing proceedings, it is worth identifying precisely what is in dispute, who currently has legal authority, whether the person concerned can still make the relevant decision, and what outcome is actually needed.
In some cases, obtaining financial information, clarifying the terms of an existing appointment or improving communication between family members may resolve the problem.
In others, particularly where there are concerns about misuse of authority or financial exploitation, formal intervention may be necessary.
The important point is to choose an approach that addresses the underlying problem rather than allowing an already difficult family situation to become more expensive and distressing than it needs to be.
Why Planning Ahead Matters
Many people regard estate planning as something that only concerns the distribution of their assets after death.
A Will is undoubtedly important, but it does not determine who will manage your affairs if you lose capacity during your lifetime.
An Enduring Power of Attorney and an Appointment of Enduring Guardian address that problem.
Equally important is choosing the right person for each role.
The person best suited to make decisions about your medical care may not necessarily be the person best equipped to manage your finances, property or investments.
For someone with significant assets, business interests or complex family circumstances, these appointments deserve particular consideration.
It is also worth discussing your wishes with the people you intend to appoint. A properly prepared document provides legal authority, but clear communication can help those appointed understand how you would want that authority exercised.
Ultimately, the purpose of good estate planning is not merely to have documents in place. It is to ensure your affairs can be managed appropriately, your wishes are respected and your family is not left dealing with avoidable legal difficulties at an already stressful time.
Need Advice About Powers of Attorney, Guardianship or NCAT?
If you are concerned about a parent’s decision-making capacity, experiencing a disagreement about their care or finances, or considering an NCAT guardianship or financial management application, obtaining legal advice early can help you understand your options.
At Willis & Bowring, we assist individuals and families with Wills, Enduring Powers of Attorney, Enduring Guardianship and guardianship and financial management matters.
With offices in Miranda and Engadine, we assist clients throughout the Sutherland Shire and surrounding areas.
Contact Willis & Bowring on (02) 9525 8100 to arrange a consultation.
This article provides general information about the law in New South Wales and is not intended to constitute legal advice. Individual circumstances should be assessed before any action is taken.