Life can change in an instant. One day you’re managing your own affairs with confidence, and the next, illness or injury might leave you unable to make important decisions about your finances or health care. If this happens and you haven’t put proper legal protections in place, your family could face significant challenges at an already difficult time.

Let’s explore what happens when someone in NSW loses capacity without having executed an Enduring Power of Attorney or Enduring Guardianship, and why planning ahead makes all the difference.

Understanding the Difference: Power of Attorney vs Enduring Guardianship

Before diving into the consequences, it’s important to understand what these documents actually do.

A Power of Attorney is your instruction manual for someone you trust to handle your business and financial affairs. This includes everyday tasks like operating bank accounts, signing contracts, and making property decisions. An Enduring Power of Attorney remains valid even if you lose capacity to make these decisions yourself.

An Enduring Guardianship covers the personal side of your life. Your appointed guardian makes health and lifestyle decisions on your behalf, such as where you live, what medical treatment you receive, and other personal care services. This document only activates if you lose capacity due to conditions like dementia, Alzheimer’s, or serious injury.

When Life Takes an Unexpected Turn: The Reality Without Proper Planning

No One Steps In Automatically

Here’s what many people don’t realise: once you lose capacity, it’s too late to sign these crucial documents. Even more surprising? No one automatically gains the right to make decisions for you, not even your spouse or children.

While Next of Kin can make some emergency health decisions, their authority is extremely limited and doesn’t extend to managing your finances or property.

The Tribunal Application Process

Without these documents in place, your family must apply to the NSW Civil and Administrative Tribunal (NCAT) to be appointed as either:

• A financial manager (for money and property matters)
• A guardian (for health and lifestyle decisions)

If no suitable family member is available, or if there’s disagreement about who should be appointed, NCAT may instead appoint the NSW Trustee and Guardian or Public Guardian.

Delays That Cost More Than Time

The NCAT process typically takes weeks or months to complete. During this time, urgent decisions may be impossible to make. Imagine needing to sell the family home quickly to fund aged care, but being unable to because no one has legal authority to sign the contract.

While NCAT is designed for people to navigate without lawyers, the process can be complex and stressful for families already dealing with a loved one’s incapacity.

The Human Cost: Family Disputes and Lost Autonomy

When Families Disagree

Without clear instructions about who you’d prefer to manage your affairs, family members often disagree about appointments. These disputes can tear families apart at a time when unity is most needed. The Tribunal will ultimately make the decision for you, and in some cases, may remove decision-making power from the family entirely.

Business Comes to a Standstill

If you’re a company director or business owner, operations can grind to a halt until someone receives official appointment to act on your behalf. This delay can have serious financial consequences for both you and anyone who depends on the business.

Your Voice Goes Unheard

Perhaps most importantly, once you lose capacity without proper planning, you have no say in who makes crucial decisions about your life. Your preferences and wishes may be unknown or overlooked by well-meaning appointees.

Protecting Yourself and Your Family

The best way to avoid these complications is straightforward: execute Enduring Power of Attorney and Enduring Guardianship documents while you have full capacity to do so.

Don’t assume your spouse or children will simply be able to step in and manage your affairs. Australian law requires proper documentation to protect everyone involved, including the person who loses capacity.

These documents give you control over who makes decisions on your behalf and provide clear guidance about your preferences. They also save your family from navigating complex tribunal processes during an already stressful time.

Take Action While You Can

Planning for potential incapacity isn’t about expecting the worst, it’s about ensuring the best possible outcomes for yourself and your loved ones. By putting these protections in place now, you’re giving yourself and your family confidence that your affairs will be managed according to your wishes, by people you trust.

Ready to protect your future and your family’s peace of mind? Contact our experienced estate planning team today to discuss your Enduring Power of Attorney and Enduring Guardianship options. We’ll explain the process in plain English and help you make informed decisions about your legal protection.

Book a consultation or get in touch to ensure your wishes are respected and your loved ones are protected.