Most of us spend our lives making our own decisions. We manage our finances, property, health, family matters and everyday affairs without giving much thought to what might happen if one day we were unable to do so.
An accident, serious illness, stroke, dementia or another unexpected event can change that very quickly.
That is why documents such as a Power of Attorney, Enduring Power of Attorney and Advance Care Directive can form an important part of planning for the future.
Importantly, the names, rules and legal powers associated with these documents vary between Australian states and territories, so professional legal advice specific to where you live is essential.
Power of Attorney – allowing someone to act for you
Broadly, a Power of Attorney is a legal arrangement allowing you to appoint another person to act on your behalf in certain matters.
Depending on the document and the laws in your state or territory, this may allow someone to undertake financial or legal tasks such as dealing with bank accounts, paying bills, signing documents or managing property.
A general or ordinary Power of Attorney can be useful when you still have decision-making capacity but need somebody to act for you – perhaps while you are overseas, temporarily unwell or unavailable.
A critical distinction is that an ordinary Power of Attorney generally does not provide the same ongoing protection if you later lose decision-making capacity. This is where an enduring arrangement becomes particularly important.
Enduring Power of Attorney – planning for the unexpected
The word “enduring” is important.
An Enduring Power of Attorney is designed so that the authority can continue if you subsequently lose the capacity to make certain decisions yourself.
This raises some very important questions.
Who would manage your bank accounts? Who would pay your bills? Who could deal with your property or financial commitments? And who would you trust to make important decisions in your best interests?
The exact decisions covered by an Enduring Power of Attorney vary around Australia. In some jurisdictions the document is principally concerned with financial and property matters, while in others it may also cover certain personal or health matters. Other states use separate guardianship or medical decision-making arrangements.
The important principle is to make appropriate arrangements while you have the legal capacity to choose who you trust and how you want decisions made.
Advance Care Directive – having a say in your future care
An Advance Care Directive is different again.
Broadly, advance care planning allows you to record your preferences, values and, depending on the jurisdiction, instructions regarding future healthcare and treatment if you become unable to communicate or make those decisions yourself.
Terminology differs across Australia. You may encounter terms such as Advance Care Directive, Advance Health Directive or Advance Personal Plan, along with separate appointments such as an enduring guardian or medical treatment decision-maker.
The common purpose is planning ahead so that your wishes are clearer when you can no longer express them yourself.
Why are these documents so important?
They are not simply documents for older Australians.
Loss of decision-making capacity can happen unexpectedly at almost any stage of adult life. Planning ahead can provide greater certainty for you and for the people closest to you.
Consider three questions:
Who do I trust to look after my financial affairs?
Who do I want involved in personal and healthcare decisions?
Have I clearly communicated what I would want if I could no longer speak for myself?
These conversations may not always be easy, but leaving everything unresolved can make an already difficult situation even harder for families.
Advice is paramount
Powers of Attorney and Advance Care Directives should not be treated as simply filling in a form.
Who you appoint, what authority they receive, when that authority operates and how your documents interact with your Will and broader estate planning can have significant consequences.
Because the legislation and terminology vary between Australian states and territories, seek advice from a qualified legal professional in your jurisdiction.
Planning ahead isn’t about expecting the worst. It is about retaining as much choice and control as possible – and giving the people you trust greater clarity if the day ever comes when you cannot make those decisions yourself.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.