Powers of Attorney
We all prefer to decide for ourselves where we live and what medical treatment and services we have. Unfortunately this is not always possible. Every day people are involved in accidents or become sick. Sometimes this can lead to them being unable to make decisions for themselves.
A power of attorney is a document where you give someone else the legal right to look after your affairs for you. A power of attorney can leave you in a vulnerable position if it’s not done properly. It is therefore very important that you choose the right person. Someone that is trustworthy, financially responsible, and likely to be around when you need them.
General power of attorney
This allows someone to make financial and legal decisions for you and is usually only for a specified time. For example, if you’re overseas and can’t manage your affairs at home.
If you become unable to make decisions yourself, a general power of attorney becomes invalid.
Enduring power of attorney
An enduring power of attorney (or EPA) allows someone to make financial and legal decisions for you in given circumstances and specifically if you become unable to make decisions yourself. The EPA will continue to operate (endure) even after you, become mentally incapable through accident or illness, and will continue to have effect during your lifetime.
Medical power of attorney
This allows someone to make medical decisions for you if you ever become unable to do so yourself. It doesn’t allow them to make other kinds of decisions.
For frequently asked questions (FAQ’s) regarding the Powers of Attorney, see our power of attorney guide and our guide to appointing an enduring guardian.
It is not always obvious when a person can’t make a specific decision, and there are times when it is only after a person loses capacity that the family members will get together and attempt to organise these documents on behalf of an elderly or infirm relative. They are usually prompted to do so when a bank, doctor, hospital, nursing home or even Centrelink becomes aware that the person is having trouble managing their own affairs and requires assistance from relatives. Often these institutions or organisations will require confirmation in the form of a power of attorney or guardianship in order to take instructions from family members in place of the person themselves.
The problem here is that the person must have mental capacity in order to make these documents. They cannot be made by someone else on their behalf. If a person does not have the capacity to make these documents then the only option is to apply to the State Administrative Tribunal (“SAT”) for an order of guardianship and/or administration.
It is not the role of a solicitor to be an expert in mental capacity assessment of their client. However, we can be involved in carrying out a “legal” assessment of their client’s mental capacity which involves:
- Making a preliminary assessment of mental capacity – looking for warning signs or ‘red flags’ using basic questioning and observation of the client.
- If doubts arise, seeking a clinical consultation or formal evaluation of the client’s mental capacity by a clinician with expertise in cognitive capacity assessment.
- Making a final legal judgment about mental capacity for the particular decision or transaction.
People whose cognitive capacity is impaired may be vulnerable to exploitation by others and may not be able to protect their own legal interests. It is therefore important to legally protect these vulnerable people from exploitation.
As lawyers, we have ethical duties to the court, our clients and to the administration of justice to ensure that the interests of our clients are promoted and protected at all times.
This may suggest that a solicitor assess whether a client has the requisite mental capacity before either taking instructions or assisting them to make a legal decision which will affect their interests. There are several cases in which the Supreme Court of NSW has considered the role of a solicitor when taking instructions from an older client where their mental capacity to understand a specific legal task is in question.
There is no single legal definition of mental capacity in New South Wales. Rather, the legal definition of mental capacity depends in each case on the type of decision which is being made or the type of transaction involved
This means there are a variety of legal tests of mental capacity. Some are contained in legislation such as the Guardianship Act 1987 (NSW) and others have been developed in common law, such as the test for testamentary capacity.
The different legal tests for mental capacity mean that a client may have the mental capacity to make some decisions, such as deciding whether to make small purchases like groceries, but may lack the mental capacity to make other decisions such as deciding whether to enter into more complicated financial arrangements. A finding of incapacity in one area does not automatically mean that mental capacity is lacking in another area.
A person may not be capable on managing their affairs but have the mental capacity to make an enduring power of attorney
A person may not have the mental capacity to make a contract but have capacity to make a will. Similar, if not greater, mental capacity is needed to make a power of attorney compared to that required for a will.
Despite the many different legal tests for mental capacity, the fundamental issue is whether the client is able to understand the general nature of what they are doing. If a client has ongoing difficulty in demonstrating this level of understanding then this may indicate a lack of mental capacity which warrants further exploration by the solicitor.
There are 6 key principles to remember whenever a client’s mental capacity may be in issue, these are set out in The Capacity ToolKit issued by the NSW Department of Justice:
Capacity assessment principles
An advance care directive is what you’d like done with your care should you be seriously ill or injured and unable to make decisions about your treatment or care.
It covers how you want to be cared for both medically and financially and can include:
- any powers of attorney
- a power of guardianship (giving someone the right to choose where you live and to make decisions about your medical care)
- an anticipatory direction (stating your wishes about your future medical treatment)
- Do not resuscitate (DNR) orders.
- Organ and tissue donation.
The documents you choose will depend on your situation and what you’re comfortable to trust others with.
An advance care directive is a part of a person’s right to make decisions about their health. They are not legally binding in all Australian states and territories however, the NSW Supreme Court has said that valid Advance Care Directives are legally binding and therefore must be followed. This means that within NSW, health professionals and Persons Responsible have no authority to override a valid Advance Care Directive.
As an advance care directive is not a legal document, we cannot help you create it. We can, however, organise certain parts of your directive by helping you set up any power of guardianship as well as Enduring or Medical Powers of Attorney, and can keep these documents as part of your estate plan.
To find out more and to help you understand and create your advanced healthcare directive go to https://www.health.nsw.gov.au/patients/acp/Pages/acd-form-info-book.aspx
You can also add your advance care directive to your My Heath Record. That way it’s available to your doctors if ever needed. You can also store the names of people you have shared your directive with.
While a power of attorney is intended to benefit and protect an individual, there is potential for an appointed person to misuse this power. A lack of understanding about an appointed person’s duties and obligations can contribute to the misuse of such arrangements, and to the potential for there to be financial abuse.
Financial abuse towards older people is a form of elder abuse and takes place when there is an ‘illegal or improper exploitation or use of funds or resources of the older person’ (World Health Organization [WHO], 2002). It may involve, for example, an appointed person using a financial power of attorney to withdraw money from the individual’s bank account for their own benefit.
Certain factors may make older people more vulnerable to financial abuse:
- diminished decision-making capacity
- dependence on someone for care
- a family member feeling entitled to the older person’s assets.
Other forms of abuse for elder or senior people can involve physical abuse, neglect, psychological and emotional abuse and social abuse or forced isolation that prevents or restricts the older person’s contact with friends, family or the community.
Elder abuse is a sensitive and complicated issue that can affect not just elder or senior people but other members of the family as well.
At Farrell Goode we understand the issues involved and can help provide elder or senior Australians with legal guidance to help prevent or restrict this type of abuse from occurring.
You can also add your advance care directive to your My Heath Record. That way it’s available to your doctors if ever needed. You can also store the names of people you have shared your directive with.
Other help and support services available to elder or senior people are as follows:
1800 353 374 (A national free call phone number that automatically redirects callers seeking information and advice on elder abuse with existing phone line service in their jurisdiction)
NSW Ageing and Disability Abuse Helpline
Telephone: 1800 628 221
Email: nswadc@adc.nsw.gov.au
https://aifs.gov.au/elder-abuse-support-services
The Australian Institute of Family Services elder abuse support services information page
As the saying goes, the best defence is offence. Therefore it is always better to be prepared for any eventuality and there is no better time than the present to book an appointment with us to go over all your estate planning needs.
Contact us on (02) 6977 1155 or send us an enquiry TODAY and we can guide you through your needs, and how to best protect yourself as you get older.