Planning for Incapacity – An Important Part of Your Estate Plan

For many people, the purpose of undertaking estate planning is to plan for the distribution of their assets upon death. This omits a very important and useful aspect of estate planning – planning for one’s incapacity.

What is meant by “incapacity”?

Incapacity, simply put, is the inability to make decisions for oneself. Incapacity can occur due to an injury (such as a car accident) or a health condition (such as dementia).

In the event of incapacity, there are a few types of decisions that often need to be made. These decisions relate to your:

  • Financial affairs;
  • Medical treatment; and
  • Lifestyle.
What documents should be part of an estate plan?

A good estate plan will incorporate specific documents to ensure that in the event of your incapacity, your wishes are carried out and decisions can be made on your behalf.

We recommend that you consider incorporating the following into your plan –

1. An Enduring Power of Attorney (EPA)

This document enables you to appoint a person to act as your “attorney”. Your attorney can act on your behalf in relation to your financial affairs. An attorney can do things such as:

  • withdraw funds from your bank account,
  • sell your real property,
  • make claims on your insurance policies, and
  • deal with Centrelink on your behalf.

Given the extensive power provided to an attorney, it’s very important that you carefully consider who you appoint.  You should trust them explicitly and be confident that they competently carry out the job. When making an EPA you need to carefully weigh up and find the right balance of risk vs convenience.

Tip: Some people feel more comfortable appointing two people to act jointly as their attorney so that control doesn’t lie with one sole person. 

2. An Enduring Power of Guardianship (EPG)

A valid EPG gives authority to your chosen “guardian” to make decisions in relation to your medical treatment and lifestyle, in the event that you lack capacity to make these decisions yourself.

Decisions that a guardian may need to make include whether you:

  • have a particular surgery and
  • keep living at home or move into a nursing home.

The decisions made by a guardian can have major implications on you, so it is important that you choose somebody that you trust to make a decision in your best interests and in line with your personal view.

3. An Advance Health Directive (AHD)

An AHD is a little different to the other tools. Instead of appointing a decision maker, this document enables you to make your own directions about your future medical treatment. The directions made in your AHD will be followed in the event of your incapacity – the directive operates as your “voice” in that instance.

What are the risks of not having these documents?

Without these documents in place, family members and loved ones may have to make an application to the State Administrative Tribunal to obtain the power to manage your affairs and make these decisions in your place, in the event of you becoming incapacitated.

Hopefully, these documents will never need to be put to use, but if they do need to be used your loved ones will be endlessly grateful that you took the time to put them in place.

Need more information? 

Read more useful will and estate planning articles by estate planning lawyer Claire Hawke-Gundill on our website. Register for an upcoming Estate Planning seminar by Claire Hawke-Gundill on Eventbrite or by emailing and qualify for a very special rate for a simple will.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.