GOOD ADVICE: Without the documents you won't be able to make decisions.
GOOD ADVICE: Without the documents you won't be able to make decisions.

Why it's important to have guardianship documents in place

I WAS recently asked what are the options for decision making for someone whose mum will need to move into an Aged Care facility in the next 12 months.

The mother doesn't have an Enduring Power of Attorney in place and she has been diagnosed with early-stage dementia. other in Sydney.

An Enduring Power of Attorney is a legal agreement that enables a person to appoint a trusted person, or people to make financial and/or property decisions on their behalf. It is an agreement made by choice that can be executed by anyone over the age of 18, who has full legal capacity.

Under the law, adults are presumed to have the capacity to make their own decisions unless it can be shown that they lack capacity. 

If your mother, for example, is struggling to make decisions and manage her own affairs, you should speak to a health professional and request a capacity assessment test be undertaken.

The decision as to whether she has lost capacity would typically be made by a neuropsychologist, a geriatrician or a psychiatrist.

If the medical opinion is that your mum has lost legal capacity, she will be unable to grant you an  Enduring Power of Attorney. Without it you will be unable to make financial decisions on her behalf.

Once she has been deemed to have lost legal capacity, any contract signed by your mum after the diagnosis becomes invalid or unenforceable. Therefore an Aged Care facility will be unable to admit your mother as a resident, nor allow you to sign the application for admission on her behalf.

In the absence of a valid Enduring Power of Attorney, in NSW you would need to make an application to the NSW Civil and Administrative Tribunal (NCAT) for a Financial Management Order (FMO) to obtain control over her financial affairs.  The information on NCAT's website www.ncat.nsw.gov.au outlines the application process and what you need to consider.

Once an FMO is granted, you should be able to manage your mother's financial affairs.

You need to be aware that NCAT can be appointed as a co-financial manager under a FMO. This would mean that financial and legal decisions would need to be passed and approved by NCAT on an ongoing basis. Furthermore, you may be required to report back to NCAT on an annual basis updating them on your mother's personal and financial circumstances.

You also need to be aware that FMOs do not cover day-to-day lifestyle or care decisions. A separate application will need to be made to obtain Guardianship Orders. A Guardianship Order allows NCAT to appoint you as your mother's guardian to make personal, medical and lifestyle care decisions.

Having to apply to NCAT (or any other government body if you reside outside of NSW) for guardianship or financial management may cause considerable inconvenience and delays in managing your mum's financial and personal care needs.

If your mum currently has legal capacity, then establishing an Enduring Power of Attorney and Enduring Guardianship should be a matter of priority. Speak to a solicitor who is an estate planning expert.

While you are speaking to the solicitor, it might be timely for your mum to review her will to ensure the will is up to date and reflects her wishes. 

Typical examples of issues where wills need to be updated will include, the original will is lost, executors are dead, bequests are in place for assets that no longer exist and beneficiaries who may be dead or unknown to the executor.

Regardless of whether your mum is happy with her current will, locating a copy of the will may be an important start.

Q&A with The Coach first appeared on www.wealthpartners.net.au. Any general advice in this story doesn't take account of personal objectives, financial situation and needs.


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