When people talk about their estate plan the first thing that usually comes to mind is their will. Most of us are pretty good at making plans for what happens if we die but more often than not we fail to plan for the possibility of losing capacity.
You can lose capacity as the result of illness or injury. One of the most common ways you can lose capacity is from the onset of dementia. With the aging population, dementia is becoming more prevalent. However, it is important to remember that incapacity can hit at any time.
Powers of attorney are legal documents that allow you to appoint someone to make financial, medical or lifestyle decisions on your behalf in the event that you are unable to make those decisions yourself. They only operate while you are living.
Your spouse, children or next of kin do not have an automatic authority to make those decisions on your behalf. If you lose capacity and you have not made powers of attorney, your family members are likely to need to apply to the Victorian Civil and Administrative Tribunal (VCAT) to obtain the authority to make those decisions for you. VCAT may appoint someone who you may not have chosen or may even appoint and independent trustee company.
There are three types of power of attorneys you should also consider:
Enduring Power of Attorney (Financial): gives the person or persons you appoint power to manage your assets and finances. Your attorney can do things such as operate your bank accounts, make decisions about your investments, pay your bills, and buy or sell property on your behalf. It can also include management of superannuation. This is particularly important for anyone who has a self-managed super fund.
Enduring Power of Attorney (Medical): gives the person you appoint power to make decisions about your medical treatment on your behalf. Your attorney can consent to medical treatment, choose between different treatment options, and withdraw treatment, including turning off life support systems, on your behalf. It is now common for hospitals and nursing homes to request that their patients and residents have appointed a medical attorney.
Enduring Power of Guardianship: allows you to appoint a person to make health care and lifestyle decisions on your behalf such as where you live, who you live with and who can visit you.
Careful thought should be given to who you appoint as your attorney(s). It is important that you appoint someone you trust implicitly. This might be your spouse, adult children or a close friend or other relative. Your attorney's must always act in your best interests and as far as possible carry out your wishes.
Powers of attorney are an important part of any estate plan. For more information contact:
T: 03 5226 8574