Why it's important to plan ahead.
As you age and the world changes, everyday tasks can become more difficult. This includes the ability to independently manage your money.
Mapping our your preferences, goals, and strategies ahead of time helps ensure that your financial wishes are upheld and gives your loved ones a clear course of action on how best to support you. It also increases your protection against elder financial abuse.
Some things to consider in your planning include:
1. estate plan
Estate plan.
An estate plan lays out what you’d like to have happen to your assets after you pass away or if you are no longer able to make your own decisions.
An estate plan can include:
- your will
- any powers of attorney or guardianship
- instructions on how you’d like to be cared for medically and financially in the future
You must be over 18 years old and mentally competent when you draw up your estate plan. It is also recommended to seek legal advice.
From more information on how to write a will or prepare an estate plan, visit the MoneySmart website
Your support network.
A support network is a group of people you trust who can help you plan and provide for your future, especially if your physical, mental health, or memory decline.
Working out what’s important to you and sharing your preferences with your support network helps ensure that your wishes are upheld in the event you can no longer independently manage your money.
Family members are usually the starting point for any support network, but it’s important to keep in mind that they may not have the right skills, qualities, or capacity to help you all on their own.
Your support network could include:
- trusted family members or friends
- your doctor, lawyer, or accountant
- a financial advisor or bank staff
Things to share with your support network.
- Your preferences for future care and accommodation if there comes a time where you’re no longer able to look after yourself at home
- Instructions on how you’d like your financial accounts, assets, and investments used and protected in the event you experience mental decline
- Where you keep important paperwork, like your wills, insurance details, property deeds and any prepaid funeral plans
- The names and contact details of your financial advisor, doctor, lawyer, and bank.
Power of attorney.
Throughout your life, there may be circumstances when you need extra help managing your money or legal affairs. The reasons are varied but often include:
- physical or mental injury or illness
- cognitive impairment or disability
- extended travel.
In these cases, power of attorney can be useful. It is a legal document that gives another person – called ‘attorney’ – the authority to make financial or legal decisions on your behalf, either for a short time or on a continuing basis.
An attorney must:
- always act in the individual’s best interests
- make the same decision that the individual would make
- keep accurate records of interactions and transactions
- avoid situations where there is a conflict of interest, and
- keep the individual’s property and money separate from their own.
Your options.
If you are considering appointing a power of attorney, we recommend that you consult a lawyer or solicitor for independent advice. Together, you can explore options and find a solution that’s right for your unique circumstances.
These options could include:
- general power of attorney: allows someone to make legally binding and financial decisions on your behalf, but only while you still have capacity. It’s often used for short-term situations, like if you are in hospital and need someone to temporarily look after your affairs
- enduring power of attorney: similar to a general power of attorney, but it continues even if you lose the ability to make decisions yourself
- third-party authority (also called ‘adding a signatory’): gives another person permission to access and manage your bank account, but only within that bank. This authority doesn’t let the other person make broader financial or legal decisions on your behalf; it just allows them to carry out basic banking tasks like paying bills.
If you are unable to afford a lawyer or solicitor, there may be free legal aid available in your state or territory. More information at MoneySmart.gov.au
Power of attorney and financial abuse.
It is important to keep in mind that giving someone else access to your money and financial affairs increases your risk of elder financial abuse