It’s unfortunate but not uncommon for people to lose their ability to make decisions related to the handling of their care, health and money as they age. Sometimes this is due to ill health, but it can also be because of mental awareness difficulties. Keep reading about guardianship and enduring power of attorney:
If you’re able to plan for the possibility of this happening, you and your loved ones will find the situation significantly less stressful. For this reason, guardianships and power of attorney exist in Australia. One of these is focused on health and wellbeing, the other on financial matters.
Here is some helpful information about both, in relation to senior Australians.
Why you need to plan for the future
Eventually, age catches up with us all. The tricky part is that none of us is ever certain about the specific date in the future when we will be unable to make decisions on our own behalf.
If you are getting on in years, it makes sense to appoint the roles of power of attorney and guardian before you need it. Once it’s too late, not only do your loved ones potentially have to go through a lengthy tribunal process to be appointed, you risk ending up with a person you don’t know and possibly don’t trust managing your affairs. Aside from the stress and anguish this will cause, your money and belongings may end up in places you don’t want them to go. This kind of situation has happened to many families, and it can cause a lot of friction.
Having the right measures and directives in place can help to avoid conflict amongst family members, and lessen confusion, and frustration if you or your loved one are suddenly unable to make decisions.
Generally, appointing a guardian and giving someone power of attorney comes about as a result of a family discussion. If you’re a family member of a senior Australian, speak with them about who they trust to have this power, then help them take action to confirm their decision in a formal way.
What is guardianship?
This explainer takes the perspective of the individual appointing the guardian:
If something happens to you and you are unable to make decisions about your healthcare, lifestyle and medical needs independently, your appointed guardian will take over.
In some circumstances, family and friends can come together to make these decisions without there being a formal guardian. However, it’s not always easy for everyone to agree, especially when it comes to things like living arrangements and medical treatment. In this case, appointing a guardian makes sense.
The guardian’s role is to make healthcare, lifestyle and medical decisions for a set period of time. These decisions may take care of living arrangements, care services, medical and dental treatment. The guardian does not have the power to make decisions related to money or other financial arrangements unless they are also an officially appointed attorney (see more about power of attorney below).
Importantly, an enduring guardian has the power to make decisions about end of life. This includes ‘do not resuscitate orders’ and turning off life support. It is important to have discussions about your wishes when you appoint this person. You may also wish to create an Advanced Care Directive (see the bottom of this article for more information). This will save your guardian from the stress of trying to figure out what you would want.
It is possible to appoint an enduring guardian yourself. This person is usually a friend or family member.
If you no longer have the ability to appoint your own guardian, a private guardian, who is usually a close friend or family member, may be appointed.
If there are no friends or family members available to act as guardian and no guardian has been appointed, a public guardian may be appointed by a court or tribunal.
How to appoint a guardian
It makes sense to nominate and appoint a guardian before the need becomes urgent.
When you go through the process, you can clarify exactly what this person can take responsibility for. You can also revoke your appointment and change it at any time providing you have the mental and/or physical health to do so
To appoint an enduring guardian, you need to download a form, fill it out and have it signed by you, the person you wish to act as guardian and a witness. It then needs to be stored somewhere safe, for example at your lawyer’s office or in a secure cabinet with your will. You should also give a copy to the person who will act as guardian so they can prove they are acting in accordance with your wishes.
When you fill out the form, you can also appoint an ‘alternative guardian’, who will step in if the preferred party is not capable of taking on the role. You can also be clear about what the guardian will be responsible for, e.g., personal services, healthcare and accommodation. If you are appointing more than one guardian, e.g., your children, you can give instructions about how they should make decisions. The options are:
- Jointly: the alternative guardians must make decisions together and they must all agree;
- Severally: each alternative guardian must make decisions separately; or
- Jointly and Severally: the alternative guardians can make decisions separately but if they make a joint decision, they must all agree.
Filling out a guardian form is usually quite straightforward. You’ll find a link to the forms and information for your state below:
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What is enduring power of attorney?
To start with, ‘power of attorney’ is a legal document that appoints a person known as an Attorney to act on behalf of another person (the Principal), with regards to the management of that person’s assets and personal property.
You will give power of attorney to a spouse, family member or other person because you need support. Sometimes it may simply be because you are travelling overseas and need someone to take care of legal matters while you’re away.
You can use a Power of Attorney for financial purpose including:
- Signing legally binding documents
- Operating bank accounts
- Paying bills
- Buying and selling real estate
- Managing investments
- Collecting rent.
Ordinary power of attorney applies when the Principal still has the capacity to make independent decisions but has nominated someone else to take action on their behalf.
Enduring power of attorney allows the attorney to act on behalf of someone else after that person has become unable to make money-related decisions. For example, if someone has a stroke or is seriously injured in an accident, the person with enduring power of attorney can make decisions on their behalf.
In both cases, an attorney can be a :
- Family member
- Close friend
- Public Trustee, NSW Trustee & Guardian, or a trustee organisation.
When you appoint an Attorney, they will be expected to act in your best interests and make the same decisions you would have made. They will need to keep records of their actions and should not combine your money with their own. You may wish to allocate additional responsibilities, for example giving money to beneficiaries.
How to give someone Enduring Power of Attorney
It is important to carefully consider who you appoint as your attorney because they will be making so many important decisions on your behalf. Make sure this person is clear on what is involved with their role and happy to take on the responsibility.
You should also speak to family members and friends about the appointment, so everyone is clear about the situation. You don’t want some siblings or relatives to be shocked and upset when they realise they can’t contribute to decisions about your finances.
Before you appoint someone to have enduring power of attorney, have a discussion about the likely outcome of different situations, for example if a property needs to be sold in order to cover the cost of aged care. If you do not have a current and valid Enduring Power of Attorney, you may be delayed access to Aged Care facilities. Most Aged Care facilities now require a certified copy of a current Enduring Power of Attorney as a compulsory requirement before accepting the resident into their facility.
The process to appoint someone with this power involves preparing and signing documents. It can be more complex than appointing a guardian so it makes sense to either work with a lawyer or a government-recommended agency to ensure the form is filled out correctly and is legally binding.
As with the form for guardianship, have your power of attorney document signed by you and the person/people with power of attorney (you can also nominate alternative parties if the original attorney is not capable) and either ask your lawyer to hold onto it or store it securely. Again, make additional copies for your attorney to hold onto.
Wills and Advanced Care Directives
Power of attorney and guardianships apply when you are still alive.
Your Will nominates how your assets will be distributed after you die. This is another formal document that should be prepared with the help of a lawyer.
The other document worth mentioning is an Advanced Care Directive. This provides a clear set of directions to be considered before medical treatment decisions are made on your behalf. It makes sense to prepare this and share it with your guardian as well as the person who has enduring power of attorney.
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