What happens to persons who become too frail or are in decline and start to lack sufficient mental capacity to manage their own affairs? What assistance is required?
Reaching retirement age acts as an incentive to create essential estate planning documents, namely a will, enduring power of attorney (“EPOA”) and enduring guardianship (“EG”). Each of these documents performs different functions, and operates at different times.
Key Takeaways
- Distinct Legal Roles: Wills direct estate administration after death, while EPOAs (financial/legal) and EGs (healthcare/lifestyle) operate strictly during your lifetime.
- The "Enduring" Protection: EPOAs and EGs remain legally valid even after the appointor loses mental capacity, ensuring decision-making continuity.
- Legal Boundaries: Appointed attorneys and guardians must act in the appointor's best interests and are legally barred from making decisions regarding voting, marriage, or voluntary assisted dying.
- NCAT Safeguards: If a person loses capacity without these documents in place, an application must be made to NCAT to appoint a financial manager or guardian.
Wills are created to bequeath estates after death, and appoint executors to administer them.
EPOAs and EGs are only valid during a person’s lifetime, becoming null and void upon the death of the person making the document, known as the appointor. Nominated EPOAs are known as attorneys, and EGs are known as guardians. The word “enduring” means that the documents will continue to be valid after the appointor has lost their mental capacity.
EPOAs appoint a trusted person or persons to assist the appointor manage their financial affairs and make legal and financial decisions for them as and when required.
EGs appoint a trusted person or persons to make decisions for the appointor relating to the appointor’s personal lifestyle choices, healthcare and wellbeing, including making medical decisions on their behalf. Unlike EPOAs, EGs can only be activated upon the appointor losing mental capacity to make their own lifestyle and health decisions.
EPOAs and EGs require legal advice and can be drafted to suit each person’s circumstances.
Attorneys and guardians must act in the best interests of the appointor at all times, and are prohibited from carrying out illegal acts, voting for the appointor, implementing voluntary assisted dying, marrying or divorcing them. Attorneys and guardians that fail in their legal responsibility can be challenged by application to the NSW Civil and Administrative Tribunal (“NCAT”) and/or the Supreme Court of NSW.
Wills, EPOAs and EGs can be revoked and changed while the appointor has mental capacity.
In the event that there is no appointed EPOA or EG after loss of mental capacity, an application to NCAT can be made after the person has lost capacity for a financial manager and/or guardian to be appointed. NCAT has the discretion as to who to appoint, including the NSW Public Trustee and Guardian. Anyone can apply to NCAT in relation to persons that have lost mental capacity and require the appointment of an EPOA and/or EG.
Connect with Castle Lawyers
Need assistance drafting your Will, Enduring Power of Attorney, or Enduring Guardianship? Contact Cecilia Castle, principal of Castle Lawyers at Asquith.
