EP FAQ Part 4: Financial Decision Making and Medical & Lifestyle Decision Making

Now that we have addressed estate planning basics and Wills in the earlier parts of our EP FAQ series, what about addressing decision-making when you no longer have the ‘capacity’ to make decisions for yourself? Read on to learn more about critical and often overlooked ‘power’ documents.

Why do I need to decide who will make my financial and medical/lifestyle decisions?

It’s essential to decide who will make these decisions for you in case you become unable to do so. By making these decisions in advance, you’re ensuring that your wishes are respected, and that your financial and healthcare matters are handled according to your preferences. It is also important to identify what your values, life goals and preferred outcomes are so the person appointed to make those health and medical treatment decisions can ensure their decision making is in line with your wishes. 

How do I decide who should have this responsibility?

To decide who will make these decisions, consider individuals who know you well, understand your values, and have your best interests at heart. It’s important to communicate your wishes with them to ensure they align with your choices. 

What does ‘legal capacity’ mean?

Legal capacity refers to your ability to make informed decisions and understand the consequences of those decisions. To create valid estate planning documents like a Will or Power of Attorney, you must have the legal capacity to understand and consent to these documents. If it is not clear whether a person has capacity to make their estate planning documents or if their capacity is in doubt, then they will usually be referred to a medical professional to obtain an assessment as to their capacity before their estate planning documents can be prepared. 

What is a Power of Attorney?

A Power of Attorney (POA) is a legal document that grants someone else the authority to make financial and legal decisions on your behalf. It’s a practical way to ensure that your affairs are managed when you’re unable to do so.  

Your Attorney will be able to do anything you legally could do. This includes managing your bank account, selling your home and buying or leasing alternative accommodation, and dealing with your super and life insurance. The attorney must always act in accordance with the document appointing them and your best interests. 

There are lots of different kinds of power of attorney, but the two most common types are a General POA and Enduring POA. 

Ready to make your Power of Attorney? We can help. Call us on 1300 654 590 or email us.

What is the difference between a General POA and an Enduring POA?

A General Power of Attorney gives the appointed Attorney the power to look after your financial affairs on your behalf, but only while you are alive and still have full mental capacity. 

An Enduring Power of Attorney appoints one or more people to step into your shoes and look after your legal, financial and business affairs only if you have lost capacity and cannot act for yourself. This includes things like operating your bank account, paying bills, and dealing with property and other investments. 

The law in some states and territories will allow you to make both a General and Enduring Power of Attorney in one document. Otherwise you may need to prepare separate documents.  

Who should I appoint to be my Attorney?

Choose someone you trust implicitly, who understands your values and will act in your best interests. It could be a family member, friend, or even a professional. It can be appropriate to appoint a professional in some circumstances but it is always best to check that the professional you have in mind is willing and able to accept their appointment.   

You can appoint more than one Attorney, but you should choose people who are able to coordinate well with each other, and who are capable of understanding your legal and financial matters. Like choosing an executor, you should also take into account practical considerations, such as where your proposed attorneys live and their personal circumstances. 

If you appoint more than one Attorney, you will need to decide whether you want your Attorneys to act ‘jointly’ or ‘severally’. Acting jointly means the attorneys must act together for all decisions. Severally means that one more attorneys can take control of the donor’s affairs without the other having to be involved. This can be a useful form of appointment if the attorneys do not live in the same location, or if one attorney is more likely to take on the majority of the tasks. 

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. 

Can I benefit other people under my POA?

Yes, you can benefit other people using your Power of Attorney, but it must be done with transparency, and the decisions should still align with your best interests. 

You may want your Attorney to have the power to do things like continue living in your family home owned by you while you are incapacitated, use your money to make mortgage payments, provide financial support to your children, use your money to upgrade their car so they can drive you to appointments, or reinvest your assets to give you a better return. 

But unless there is an actual term in your power of attorney document allowing your attorney to do these things, they won’t be able to benefit themselves or others. 

Can I end a POA?

Yes, you can revoke or end a POA as long as you have legal capacity. There are several reasons you might want to revoke your Power of Attorney. You may no longer trust the person that you have appointed as your Attorney, you may have found a more suitable person to be your Attorney, it may be that your Attorney has been abusing the power that you have given them or maybe your Attorney has moved interstate and it is no longer practical to have them as your Attorney. 

You should check whether there is a specific form of revocation, depending on the laws that apply to the Power of Attorney. If there is no specific form to revoke a power of attorney, you should put something in writing to make it clear that the Power of Attorney is revoked. The Revocation Notice must be provided to your Attorney(s). Your bank and any other institutions and registries where the Power of Attorney has been previously noted, produced or registered, must be provided with a copy of the Revocation Notice too. 

What is an Advance Care Directive or Appointment of Enduring Guardianship?

An Advance Care Directive (ACD) is a legal document in South Australia that outlines your preferences for medical treatment and healthcare decisions in case you’re unable to express your wishes. It appoints and guides your ‘substitute decision-maker’ in matters such as where you live, what health care you receive, and other personal decisions.  An ACD allows 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. 

An Appointment of Enduring Guardianship is the NSW equivalent of an Advanced Care Directive and has a similar purpose and powers. 

Who should I appoint to be my substitute decision-maker or enduring guardian?

Your substitute decision-maker or enduring guardian should be someone who you think understands and respects your healthcare wishes. They should be willing to advocate for your best interests in personal and healthcare matters. This could be one or more family members or friends.  Unlike a General or Enduring POA, it is unlikely that a professional will accept appointment under an Advance Care Directive or Appointment of Enduring Guardian. You also cannot appoint any treating medical practitioners.

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. You may wish to appoint more than one substitute decision-maker or enduring guardian.  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. 

Don’t wait until it’s too late. We can help you put in place current and effective ‘power’ documents. Call us on1300 654 590 or email us.

More questions about your estate planning?

Check out the rest of our EP FAQ series:

 

The information contained in this post is current at the date of editing – 25 September 2023.

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