None of us like imagining a time when we many need to support someone who has lost capacity, whether it's a parent, partner, or sibling (or heaven forbid, ourselves). But supporting someone who can no longer make decisions for themself is far more common than you may think. And when it happens, it can turn life into a complex emotional, legal, and financial maze.
While we generally think of loss of capacity as being the realm of older people, loss of capacity can also be due to an accident or illness which can happen at any point in a lifetime. Usually quite unexpectedly.
Issues relating to the loss of capacity are always tricky, and can be difficult to broach. Generally people are aware and well supported around medical issues, taking their cues from doctors and other medical professionals but can struggle when asked to make key legal and financial decisions.
Ensuring you're protected incase of loss of capacity is a vital part of estate planning.
Timing is everything
As with most things, the earlier you act the better; though many decisions need to be made whilst your loved one has sufficient capacity to understand what they're doing and are able to make the decision(s) in question.
The more complicated the decision, the more complex their finances or family situation is - the higher the threshold is for your loved one to understand the issues and decide how best to proceed.
If you or your loved one don't do advanced planning the risk they have lost capacity before a decision can be made is high. This often results in a state of limbo where nobody is able to make decisions and family members need to apply to the Courts for authority to act. This kind of application can be both time-consuming and expensive and means you run the risk of getting bogged down in a dispute if other family members oppose the decision the Court is being asked to make.
🔍 Top Tip: Appoint an appropriate Enduring Power of Attorney and nominate Substitute Decision Maker (through an Advance Care Directive) as part of your estate plan and regularly review and update who has been nominated as life changes.
Ask questions
If you've been nominated as an Enduring Power of Attorney or Substitute Decision Maker ask questions about your loved one's wishes around aged care, medical treatments, and financial decisions.
If someone is beginning to lose capacity, it can be difficult for them to understand previously understood concepts and they are risk of undue influence.
🔍 Top Tip: Have a family meeting to discuss financial and aged care wishes so all family members are aware of the decisions being made.
Beware of Undue Influence
Undue influence - where someone is deemed to have used their position to influence someone's decisions - is often a concern in the context of loss of capacity.
This is a significant consideration as a claim of undue influence could, amongst other things, render the decision made by your loved one void. In addition, the person who helped them decide could be held liable for any loss as a result of the decision.
If someone is beginning to lose capacity, it can be difficult for them to understand previously understood concepts. With that in mind, it's important to ensure that when having conversations with someone about the decisions they want to make, you and other family members do not involuntarily expose yourself to allegations of undue influence.
The best way to protect against this is to engage a legal professional to take instructions and take the steps necessary to confirm that decisions being made are free of undue influence.
These steps are particularly important in situations where there is a rift in the family, or estranged family or friends who may seek to challenge decisions on the basis of undue influence.
As ever, transparency and professional advice are your best friends.
🔍 Top Tip: Include a clause in the Enduring Power of Attorney document requesting the Attorney shares bank statements with interested parties to ensure transparency.
Worried someone else is misusing a Power of Attorney?
When someone starts to lose capacity, emotions run high and power dynamics can get messy. If one person seems to be calling the shots, others might suspect "undue influence".
If you're worried someone is misusing their Power of Attorney, is using or mismanaging money, or taking advantage of the person who has lost capacity - don't sit on it.
You can make an application to SACAT (South Australian Civil and Administrative Tribunal) to:
- Review the appointment of the Power of Attorney
- Replace the current Power of Attorney
- Appoint a Financial Administrator
Protecting yourself and the people you love in the event of incapacity is a vital part of your estate planning journey. We'll work together to come up with a plan for who to best manage your financial affairs and ensure you and your Attorney are protected.