Background
Like most developed countries, Australia’s population is aging.
In 2017 there were over 3.8 million Australians who were over the age of 65 and this figure is only projected to increase over the coming decades. With an increased life expectancy comes a number of unique challenges.
The number of people in our society who are beginning to experience health related conditions that effect their cognitive ability is on the rise. Whether it be strokes, dementia, learning disabilities or other cognitive impairments – there are a large number of health conditions that can seriously affect the ability of a family member to manage their own legal, financial or health affairs. It is for this reason that families need to be proactive and plan ahead.
What legal documents does your family member need to have?
Every person (but particularly senior citizens) should really have a will, a power of attorney and an enduring guardianship. If your family member has superannuation, they should also consider whether they sign a binding death benefit nomination as well.
These documents should all be stored in a safe place where they will not be lost, thrown away, stolen or damaged.
We recommend leaving them with the law firm – as many law firms have safes that can be used to store your original documents. This also allows family members to easily access the documents should the need arise.
What do you do if you are unsure whether a family member has capacity to sign estate planning documents?
The first step that that you should take is to see a lawyer. A lawyer can make an appointment to speak with the family member to discuss their legal, financial and health related affairs. This is crucial if there is a risk that your family members health condition may deteriorate.
What are the tests for whether a person has capacity?
There is a general presumption that a person will have decision making capacity unless there is clear evidence to the contrary.
Wills
In order for a person to make a will, the court needs to be satisfied that the person can:
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Understand the nature and effect of a will;
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Understand the nature and extent of their property;
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Comprehend and appreciate the claims which they ought to give effect; and
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Be suffering from no disorder of the mind or insane delusion that would result in an unwanted disposition.
Powers of Attorney
In order for a person to sign an enduring power of attorney they need to be capable of understanding that:
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The appointed attorney will be able to exercise complete authority over their financial affairs;
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The appointed attorney will be able to do with their property anything that they are capable of doing;
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The authority will continue in the event that the appointer loses capacity; and
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Should the appointer become mentally incapable, that the power will be irrevocable without a court intervention.
More information can be found here.
Enduring Guardianship
In order for a person to sign an enduring guardianship, they need to be capable of understanding:
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The effects of appointing an enduring guardian;
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That their appointed guardian will be able to make decisions on the appointer’s behalf concerning their health and accessing the medical records; and
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That they are capable of communicating that they wish to appoint an enduring guardian.
More information can be found at here.
What other steps can you take?
Where a person’s mental capacity is in doubt or is likely to be contested, a lawyer will usually recommend that the person making the appointment also undertake a medical examination from a medical practitioner. This helps resolve any question as to whether the person has capacity or not – and can be used in the event of a legal dispute.
What happens is someone does not have capacity?
In New South Wales, a person seeking to be appointed as guardian or attorney for a person who has lost capacity may make a Guardianship application to the NSW Civil and Administrative Tribunal. This can be a long, expensive and complicated process and it can sometimes take several months for an order to be finalised.
More information about this process can be found here.
If you would like to have a professional consultation on these matters, give us a call on (02) 9982 1655 or visit our Northern Beaches office located on Fisher Rd, Dee Why.
