Discussing your will and estate planning with your adult children should not be taboo territory. In fact, it’s kind of mandatory.
In Frank and Earnest, we explicitly want to have ‘The Conversations of Life’ and there are few conversations of life more emotive than conversations about death [as we recently touched on in our story about Death Cafes].
One of the other big taboo topics of conversation, at least in this country, is money. Combine money with family and the spectre of death and you have a conversational difficulty rating shooting off the chart.
But the money/family/death conversation is one every individual and family should have – sooner, rather than later. And part of that conversation needs to include arrangements for an enduring power of attorney – a legal document that gives someone the right to make personal and/or financial decisions on your behalf, should you lose the capacity to make those decisions yourself.
Yes, it’s a complex decision, particularly in the context of harmonious family relationships and where there may be questions of possible financial abuse – the most common form of elder abuse.
It isn’t helped by the fact that different states and territories have different legislation around the duties of a power of attorneys and whether the power of attorney document needs to be formally registered*. It can lead to difficult situations for banks and other third party financial institutions when they are required to verify a document and that it is the current version, especially if it is in a different state.
“Laws related to substitute decision making tools for consumers should be harmonised across states and territories to make it easier to understand for Australians.”
Better security and protection for older people
A new report entitled Policies and Practices of Financial Institutions around Substitute Decision-Making, is calling for some much needed reform around recognising and verifiying powers of attorney – especially enduring powers of attorney – to better protect older people from potential financial abuse.
A collaboration between the University of Western Sydney (UWS), the Cognitive Decline Partnership Centre and the Council on the Ageing NSW, the researchers looked at how banks and credit unions handle powers of attorney and whether these instruments are practical and effective.
Among the recommendations – which include better internal systems and education for staff within the banking sector, better consumer education and tighter restrictions for online banking – they are calling for a national register for powers of attorney.
They are asking financial institutions, consumer groups and other relevant organisations to lobby the federal government to establish such a national register.
“…To help prevent financial abuse, customers need to be aware of their options when they need support to make financial decisions.”
Voices united in need for reform
UWS Adjunct Fellow in Elder Law, Sue Field, who was the lead investigator in the study said the report shows the need for changes to existing laws and wider community education on the use of power of attorneys.
“Laws related to substitute decision making tools for consumers should be harmonised across states and territories to make it easier to understand for Australians.
“A national register would also help banks, financial institutions and other service providers verify the authority of a power of attorney or court-appointed administrator,” she said.
The banks agree they have an important role.
Chief executive of the Australian Bankers Association, Mr Steven Münchenberg said a shared effort was required from governments, business and the community to protect the financial interests of older Australians, particularly those with cognitive impairment or other decision making challenges.
“Banks have a role in ensuring there are appropriate safeguards in relation to customers’ financial decision making. To help prevent financial abuse, customers need to be aware of their options when they need support to make financial decisions.
“Powers of attorney are important to help protect customers. In addition to this substitute decision making tool, banks have other decision making options, such as two-to-sign accounts, for customers who want to retain their financial independence but need a bit of help.”
Having the difficult conversation
The Cognitive Decline Partnership Centre Director, Professor Susan Kurrle said planning for the possibility of cognitive decline, and the financial consequences of this, is not common practice.
“Consequently, only a small proportion of people have in place a formal substitute decision making tool.
“One of the many problems associated with powers of attorney is that in NSW* they are not required to be registered, unless the attorney wishes to engage in property dealings. Therefore, no-one knows how many are in existence, or if the document is the most recent, or even if it is actually a valid document,” she said.
All of which goes toward taking the brave step of calling in the family and any other people close to you and having that full family conference. If you can afford to bring in your lawyer and a financial adviser, all the better.
Look at all the options, think them through and be clear in your decisions and communications. Discussing your will and estate planning with your adult children should not be taboo territory. In fact, it’s kind of mandatory.
* see different arrangements for power of attorney in different states and territories in the table below, courtesy of The Australian Bankers Association.
Need to know:
- A power of attorney is a legal document that gives someone the right to make financial and/or legal decisions on behalf of another person.
- A general power of attorney operates for a particular period of time or for a particular purpose. This is useful if a customer wants to put a temporary formal arrangement for a specific purpose in place, or an arrangement for a defined period of time.
- An enduring power of attorney is designed to commence once the attorney has accepted his/her appointment or at a later time specified. Unlike a general power of attorney, this type of authority remains valid even when the customer may no longer be capable of making their own decisions.
- Guardianship involves making personal, medical and lifestyle decisions. A court or tribunal authorises a guardian to make decisions about a person’s work, living arrangements or medical care and treatment.
There are differences between formal substitute decision making legislation in the various states and territories in Australia, as outlined below:
