Getting your estate planning up-to-date. Part 3: What happens if you’re incapacitated for a period of time?

This is the third in a three-part series of articles about providing for your family if the worst should happen.

Part 1 of our series looks at how you own your assets and how this impacts your estate planning. Part 2 goes through the various ways that you can give your assets to your loved ones, including using ‘testamentary trusts’ and dealing with ‘blended families’. This Part 3 deals with putting in place documents to ensure that your personal and financial affairs can still be dealt with if you become incapacitated for any reason, including spending time incapacitated in the hospital.

The particular strategies we talk about are:

  • An Enduring Power of Attorney – which gives someone the ability to deal with your business and financial affairs;
  • An Enduring Power of Guardianship (NSW) – which gives someone the authority to direct what health and personal care you receive (or don’t receive);
  • An Advance Care Directive (SA) – this is the South Australian equivalent to an Enduring Power of Guardianship; and
  • A Company Power of Attorney – this is for people with business and investment structures involving companies, and is very important to prevent your companies from becoming ‘locked up’ if you’re incapacitated.

We have based this discussion around SA and NSW to keep things simple. But we help people in all States and Territories, and similar principles apply throughout Australia.

Who will look after your financial and business affairs?

What is an Enduring Power of Attorney?

An Enduring Power of Attorney is a very useful and powerful legal document.  It appoints one or more people (together, your ‘Attorney’) to step into your shoes and look after your legal, financial and business affairs if you lack the mental capacity to act for yourself. This includes things like operating your bank account, paying bills, and dealing with property and other investments.

You can specify for an Enduring Power of Attorney to apply immediately, or only when you begin to lack mental capacity. If you are appointing someone you trust implicitly, such as your spouse, then it is simpler to make the appointment start immediately.

Who should I appoint to be my Attorney?

An ‘Attorney’ in this sense does not mean your ‘lawyer’ (like in the USA).  An Attorney is a special role that is quite often fulfilled by a trusted family member, close friend or a professional like us.

You can appoint more than one Attorney, and this is often a good idea.  You should choose people who are able to coordinate well with each other, and who are experienced in legal and financial matters.

If you appoint more than one Attorney, you will need to decide whether you want your Attorneys to act ‘jointly’ (to make all decisions together) or ‘severally’ (where one Attorney can make a decision without involving the others).  The benefit of having two attorneys acting jointly is that there is less chance of both Attorneys acting contrary to your interests.

Another good idea is to appoint one or more ‘back up’ Attorneys, so if the person you have appointed as your primary Attorney cannot act, or ceases to act, then someone can immediately step into their shoes can keep looking after your legal and financial affairs.

Who can make an Enduring Power of Attorney?

Any adult can make an Enduring Power of Attorney.  If a person has a mild intellectual disability or is in the early stages of dementia, they may still be able to make a Power of Attorney.  This will depend on their understanding of the nature and effect of the document.  If you consider that your capacity (or that of someone you are helping) is in doubt, then an assessment of the person’s understanding can be made by a medical practitioner.

You can only appoint a Power of Attorney while you are of sound mind. It is too late after you have lost legal capacity. You need to get this in place now. We can help, call us on 1300 654 590 or email us.

What happens if I don’t have an Enduring Powers of Attorney

If you become incapacitated and have not made an Enduring Power of Attorney, then you lose the ability to appoint someone to manage your legal and financial affairs.  Someone will need to apply to the State administrative body (SACAT or NCAT, or even the Supreme Court in certain circumstances) to formally have a manager appointed.  This means a government official could be making decisions on your behalf.  Regular fees are charged for this service.  Having a caring friend or relative, or your trusted legal advisor, acting as your Attorney is usually a much cheaper and better alternative.

What can your Enduring Attorney do?

Your Attorney will be able to do anything you legally could do. This includes managing your bank account, sell your home and buy or lease alternative accommodation, and deal with your super and life insurance – to name but a few things.  The wording of your Enduring Power of Attorney needs to include any conditions or restrictions you wish to place on your Attorney’s power.  For example, you may direct your Attorney to look after your spouse and children, to maintain your super death benefit nomination, to pay your life insurance premiums, to maintain your current lifestyle, to priorities expenses associated with your health and wellbeing, etc.

If your Attorney acts dishonestly or improperly, the Court can intervene to protect your interests. If you regain capacity you can also sue your Attorney for compensation if they have acted inappropriately.  That said, dishonesty or impropriety can be expensive to prove, and your Attorney may not have any assets to pay compensation, so be careful about who you choose.

Can I change or revoke my Enduring Power of Attorney?

You can cancel your Power of Attorney at any time, as long as you are of sound mind. You must make sure your Attorney (and other interested parties such as your bank) know that you have canceled the appointment. You do this in writing.

We can help you put in place an Enduring Power of Attorney, as well as cancel or update an existing appointment.

Who will make health care decisions for you if you are incapacitated?

Can you appoint someone to make these decisions for you?

The short answer is yes. In South Australia, you need to make an Advance Care Directive (ACD). In New South Wales, you appoint an Enduring Guardian.

These documents allow you to appoint someone to make medical and lifestyle decisions on your behalf when you are unable to.  Decisions such as where you live, what health care you receive, and other personal decisions (e.g. making arrangements for your children if you are temporarily in hospital).  They allow you to write down instructions, preferences, and wishes concerning your future health care, preferred living arrangements and/or other personal matters.

You can also include a binding direction about having or refusing certain medical treatment or procedures. These directions must be taken into account by your appointed decision-maker, and your healthcare practitioner.  You are not able to specify any wishes, directions or binding provisions in these appointments that are unlawful or would require an unlawful act to be performed.

Who can I appoint as my substitute decision-maker?

The person you appoint must be over 18 years old, be capable of understanding what the document is used for and when it will apply and cannot be responsible for providing treatment or care to you at the time of appointment (i.e. you cannot appoint your doctor or paid carer).

You may wish to appoint more than one substitute decision-maker.  If you appoint more than one, you will need to specify whether you want them to make joint or separate decisions. You should also consider appointing one or more ‘back up’ decision-makers, in case your first choice is not able to act or continue to act.

What happens if I do not appoint a substitute decision-maker?

As with a lack of an Enduring Power of Attorney, someone will need to apply to the State administrative body (SACAT or NCAT, or even the Supreme Court in certain circumstances) to have an order made allowing them to make personal care and medical decisions on your behalf. This can be a complex process to navigate, especially at a time when access to the tribunal is restricted.

We can help you prepare the necessary documentation to properly appoint a substitute decision-maker, or to revoke or update such an appointment

Who will run your companies and trusts if you become incapacitated?

Many people use private companies in their business and financial affairs. For example, you may operate your business through a company, or have a company acting as the trustee for your family trust or self-managed super fund. If this is the case, then you need to make sure you have arrangements in place so that these companies can continue to operate even if you become incapacitated.

If you have a private company, and you are the sole director, have you thought about what happens if you become incapacitated, or worse, die?  Who will pay the bills, and enforce the company’s rights?

A company can only act through its directors, and if the sole director is not able to act, then the company is effectively ‘frozen’.  The only people who can appoint a new director are the company’s shareholders – and if you are the only shareholder, then things get interesting.

The Corporations Law allows a company to appoint a power of attorney, someone or perhaps another company to act on its behalf.  These powers of attorney can be limited in scope or as broad as you need.

We can help you put in place a power of attorney for your company to ensure it can keep operating if something happens to you.

What to do next

Call us on 1300 654 590 or email us and speak directly with one of our experienced and helpful lawyers. We can assess your current circumstances, and recommend what documents you need to put in place to ensure life goes on if you are out of the loop for a period of time.

What to read next

If you have not already read the other parts of this series, then check them out here:


The information contained in this post is current at the date of editing – 13 July 2023.

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