Law Talks Episode: What happens when a loved one loses capacity without an Enduring Power of Attorney?

Robyn: Good morning and welcome to another edition of Law Talks here on 4CRB. Today, we’re going to be discussing what happens when a loved one loses capacity and hasn’t set up an enduring power of attorney so that someone can step in to support them and help them make decisions. Many families find themselves in this situation and don’t know where to start and how to go about getting the authority to be able to manage that person’s affairs. To help us understand the process, we’re joined by Attwood Marshall Lawyers Senior Associate and Accredited Aged Care Professional, Larisa Kapur. Thanks for being here, Larisa.

Larisa: Thank you for having me, Robyn.

Robyn: Well, let’s start with the basics. What does it mean for someone to lose capacity when it comes to making financial and legal decisions?

Larisa: Generally, losing capacity means that a person’s no longer able to make decisions for themselves. So, these decisions can range from personal and lifestyle decisions, such as where you live, to legal decisions, medical treatment decisions, or financial and property decisions. People can lose decision making capacity for any number of reasons, but we often see this as a result of conditions like dementia, a stroke, a brain injury or Alzheimer’s.

Robyn: Is there a test to take to determine if someone has lost capacity?

Larisa: Well, legally speaking, a person is considered to have lost capacity if they can’t understand, retain or communicate their decisions effectively. So, there are different capacity tests for different types of decisions.

Some tasks require a higher standard to be applied. For example, someone drafting an enduring power of attorney needs to meet specific criteria to ensure they understand the nature and effect of that document. After all, an enduring power of attorney is an incredibly powerful tool that allows you to appoint someone the power to handle all of your fares, including accessing your bank account, selling your property if needed, or deciding where you live and what medical treatment you receive or what you don’t receive.

So, there is also a different standard applied to someone drafting Wills, for example. So, on the flip side, there’s a much lower standard for testing capacity for people who want to get married, which might surprise you because we all know what a big decision that can be.

Robyn: Yeah, that’s for sure. What if someone’s capacity fluctuates? We know with conditions such as Alzheimer’s and dementia, there can be good days and bad days, so since these conditions are progressive, someone in the early stages might be able to make more decisions than they could later on. How is that handled legally?

Larisa: Well, that’s a great question. So, in legal terms, decision making capacity isn’t seen as all or nothing.

It’s assessed on a decision-by-decision basis. This is also where supported decision making comes in. So rather than taking full control away from someone immediately, if they are showing decision making impairment, the law recognises that a person should be supported to make their own decisions as much as possible.

So, this means that providing information in a way that they can understand, so sometimes it’s about simplifying things for someone to be able to clearly understand what you’re asking of them or the questions they need to answer. Allowing them time to process decisions, especially on difficult days. Involving trusted family members, friends or professionals who can help interpret and communicate their wishes with them or on behalf of them.

Only when someone fully loses capacity for a particular decision would a legally appointed guardian or administrator need to step in and make choices on their behalf.

So, it’s about maximising autonomy for as long as possible and supporting the individual to be a part of that decision making process.

Robyn: Sure. So normally if someone has an enduring power of attorney, they’ve already chosen who handles their affairs if something happens to them and they can no longer make those decisions. But what if they haven’t put one in place?

Larisa: So, if there’s no enduring power of attorney in place then no one automatically has the legal authority to make decisions on their behalf, not even their spouse or children, which some people find difficult to believe.

This is something many people aren’t aware of, and where families often run into great difficulties because banks, healthcare providers, and government agencies won’t just hand over control to the next of kin.

So, it’s really important to note that without having an enduring power of attorney, these individuals who are relevant in your life, such as you know next of kin or spouse, might need to go through a complicated process via QCAT to get the authority to be able to act on your behalf.

Robyn: So, Larisa, if a family realises their loved one has lost decision making capacity, what’s the first thing they should do?

Larisa: Well, the first step is to get a professional assessment of the person’s decision-making capacity. So, this is usually done by geriatrician, a psychiatrist or a neurologist, depending on what health factors are contributing to the loss of capacity. A GP might also be able to provide that initial opinion.

But for a more formal assessment, that’s what will be required if you need to apply for decision making authority.

Robyn: So, one of those specialist medical areas?

Larisa: Yes.

Robyn: Okay. So once the medical evidence is obtained, what’s the next step for families in Queensland?

Larisa: So, in Queensland you need to apply to QCAT, which is the Queensland Civil and Administrative Tribunal, and there are two types of appointments you can apply for.

So, one is you can apply to be a guardian, which is to make personal and health decisions on behalf of the person who’s unable to do that themselves.

And second, there is an administrator where you apply, you know, to be able to manage this person’s financial affairs. Now in New South Wales, you can apply to NCAT, which is, you know, the equivalent, the New South Wales Civil and Administrative Tribunal. The process is similar, but the terminology is slightly different.

So, for example, number one would be applying to be a guardian, which is someone who’s managing that persons personal and healthcare decisions. And, number two, you would apply to be a financial manager, which is the person applying to handle all financial affairs, yes.

Robyn: And Larisa, what documents need to be submitted with these applications?

Larisa: Both for QCAT and NCAT, a completed application form requesting the appointment, a medical report confirming the person lacks decision making capacity, supporting evidence, also to show why the applicant is the right person to take on the role as the decision maker for the adult who’s lost capacity.

Robyn: And does anyone who intends to go through this particular process, do they need a lawyer to do this?

Larisa: Generally speaking, it’s not required, but legal advice and guidance through the process can be very helpful, especially if there are disputes within the family about who should be appointed as the guardian or administrator. I also want to say that these documents and supporting evidence isn’t simple. It’s not just, you know, a simple medical certificate or something like that. You need to have good supporting evidence when applying.

So, QCAT and NCAT aim to make the process accessible, but navigating the legal requirements can still be really overwhelming.

Robyn: Yes.

Larisa: If the tribunal suspects that disputes will arise and there’ll be difficulties in decisions being made in the best interest of the individual, then they may be inclined to not appoint a family member to the role and instead appoint the public trustee to manage that person’s affairs, which we all know is something everyone should try and avoid.

Robyn: Yeah, one hundred percent. And what happens once the application is submitted?

Larisa: So, once it’s submitted, the tribunal will schedule a hearing where the applicant, usually the family member, presents their case. Other interested parties such as siblings or close relatives, can also have their say. The tribunal will then decide whether an appointment is necessary and who should take on that role.

Robyn: So, Larisa, it seems there’s a lot of people that have the opportunity to have their say, but does the person who has lost capacity have a say in this process?

Larisa: Yes, absolutely. If they’re still able to communicate their wishes in any way, their views will be considered, and they will be asked to contribute.

Robyn: Are there any common challenges families face during this process?

Larisa: Yes. Some of the key challenges that come to mind is family disputes over who should take on the role, delays in getting medical reports or tribunal hearings, I hear that sometimes waiting for a specialist can be, you know, months, months like 12 months.

So that’s a bit difficult. Ongoing reporting requirements, especially for financial decisions, which is you know, a point that the Tribunal can put as part of the conditions of the application. So, someone would have to continue to provide evidence on what they’re doing and what decisions they’re making. And also the lengthy time it can take to actually obtain these orders. There is a bit of a wait list to even apply for the orders, and that’s where families are finding a struggle. They need to act quickly, help someone go into care or manage their affairs, and they don’t have the authority and they’re waiting months to get a spot.

Robyn: So, what advice would you give to families to avoid these issues?

Larisa: Well, the best advice is to plan ahead.

Robyn: I think I know what you’re going to say.

Larisa: Plan ahead. If your loved one is still capable, discuss setting up an enduring power of attorney now to avoid this complex legal process later.

Once someone loses capacity, these decisions become much harder. Additionally, if you’re applying to QCAT or NCAT to be appointed as guardian or administrator of a loved one’s affairs, don’t go it alone. Get some legal advice and support with the application process to ensure you can move through the legal system as quickly as possible and get everything in order so that you can protect your loved one’s best interest, take care of them and avoid any unnecessary delays.

Robyn: Yeah, I imagine it’s a particularly emotional and potentially frustrating time, so if all that’s done in advance, it does make life a lot easier.

Larisa: Yes, one hundred percent.

Robyn: Thank you for your advice today, Larisa.

Larisa: Thank you, Robyn.

Robyn: You’ve been listening to Law Talks here on 4CRB, which you can hear every Friday morning from 9 o’clock.