What happens if I lose capacity and don’t have legal documents in place?

Jul 23, 2021
If you haven’t organised it already, it's crucial you appoint an Enduring Power of Attorney. Source: Getty

If you lose capacity – god forbid – and don’t have an Enduring Power of Attorney and Enduring Guardianship appointment in place, there are consequences that you need to be aware of.

If this circumstance arises in New South Wales, somebody (and perhaps someone you wouldn’t choose yourself) can approach the NSW Civil and Administrative Tribunal (NCAT) Guardianship Division and seek an order for control of your affairs. In the financial year ending June 30, 2020, there were 12,850 applications to the NCAT Guardianship Division. That’s approximately 247 applications each week on average just in one state.

There are similar tribunals and/or courts in each of the states and territories to deal with these issues.

What happens when the tribunal is approached?

The tribunal hears various types of matters, including guardianship orders for people who have not made an Enduring Guardianship appointment and then that person has lost capacity so they can no longer make that appointment. A medical or accommodation issue can arise and then decisions need to be made for that person. Of the applications from the 2019-2020 financial year, 57 per cent resulted in the Public Guardian being appointed to make decisions for the person. This means decisions are removed from family members.

The application numbers are similar for people who have not made an Enduring Power of Attorney and a financial or property matter arises and decisions need to be made for the continued management of their financial affairs. These affairs can include the person’s property, tax affairs, banking, shares, investments and superannuation. Of the applications from the 2019-2020 financial year, 52 per cent resulted in the NSW Trustee and Guardian being appointed. Again, this effectively removes any control from the person’s family for financial decision making.

The tribunal can also review appointments where, for example, an appointee is not acting in the interests of the person who appointed them and they need to be called to account.

The majority of applications were made for people aged 75 and over.

How can I prevent the control of my affairs going to the state?

These statistics are a sobering reminder that it is crucial to get your estate planning affairs in order. It will give you peace of mind, and provides you with an opportunity and advantage to express your wishes and intentions to your substituted decision maker while you are well.

You can’t know in advance how quickly your health and capacity may decline. Of all applications to NCAT, 39 per cent involved people who had been diagnosed with dementia. Other categories that were identified in applications during that year were: intellectual disability, mental illness, brain and neurological injuries.

If you haven’t organised it already, it’s crucial you appoint an Enduring Power of Attorney and an Enduring Guardian. Or, if you have appointed these, it’s wise to review them from time to time to make sure what you did in the past reflects your current wishes. This will give you peace of mind that a person of your choosing will have control over your affairs if you’re no longer able to.


1. What is an Enduring Power of Attorney?
An enduring power of attorney allows you to appoint someone you trust (an attorney) to make decisions about personal (including health) matters and/or financial matters for you. An attorney for personal matters (including health matters) can only make decisions for you when you do not have capacity to make those decisions.

2. What is an Enduring Guardian?
An enduring guardian is someone legally appointed to make everyday living decisions if a person becomes unable to make these decisions for themselves, due to physical or mental illness. The word “enduring” means the responsibility is continual, typically until death of the appointer or appointee.

3. What is a Public Guardian and a Public Trustee?
These are independent statutory officials appointed under state government legislation. A Public Guardian can make personal and/or health decisions on your behalf. This could include decisions about where you live, what support services you receive, general health-care matters and other day-to-day issues. A Public Trustee ensures your financial interests are protected. They are typically given authority to make decisions such as selling or buying a property, paying bills or managing investments.

For more on powers of attorney and how to choose the right one, read our other articles, here and here.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.

Are you compiling an estate plan? How are you finding the process?

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