Planning for retirement and beyond isn’t only about managing assets or preparing for what happens after you pass away. A critical, yet often overlooked, part of estate planning is ensuring your wishes can be carried out while you are still alive if you lose capacity to make decisions for yourself.
Loss of capacity can happen gradually or suddenly, and without the correct legal documents in place, your family may face unnecessary stress, delays and legal hurdles when trying to support you.
This article explains why appointing decision‑makers is essential, what documents you need in Victoria, and how they interact with aged‑care decision-making and your long‑term estate plan.
1. Why Planning for Loss of Capacity Matters
Loss of decision‑making capacity can arise due to dementia, illness, medical events or accidents. If there is no appointed decision‑maker, your family may be forced to apply to the Victorian Civil and Administrative Tribunal (VCAT) for orders appointing an appropriate person.
Putting the right documents in place ensures that:
- Your chosen decision‑makers, not a tribunal, are the ones managing your affairs.
- Your preferences and values guide decisions about your finances, lifestyle, care and medical treatment.
- Your family can avoid conflict, confusion and delays during already difficult times.
- Decisions can be made quickly if you require aged‑care accommodation, sale of your home, or access to funds.
2. Enduring Powers of Attorney – Financial & Personal
In Victoria, an Enduring Power of Attorney (Financial and Personal) authorises someone you trust to make decisions on your behalf if you lose capacity.
Financial decisions may include:
- Paying bills and managing bank accounts
- Selling property
- Handling investments
- Managing contracts, including aged‑care and retirement village arrangements
Personal decisions may include:
- Where you live
- Who you live with
- Lifestyle and day‑to‑day matters
You may appoint the same person for both roles, or different people depending on their skills and your family dynamics.
Choosing the right attorney is crucial. Select someone who is trustworthy, organised and capable of navigating complex decisions such as selling your property, signing aged‑care agreements or managing large sums of money. Poor choice of attorney is a common cause of elder abuse or mismanagement of assets.
3. Medical Treatment Decision-Maker & Advance Care Directives
Under the Medical Treatment Planning and Decisions Act 2016 (Vic), you can appoint a Medical Treatment Decision-Maker to make health‑related decisions if you are unable to.
You can also prepare:
- Values Directives – expressing your preferences, beliefs and values
- Instructional Directives – legally binding instructions regarding specific treatments
These documents guide medical professionals and relieve family members from the burden of making difficult end‑of‑life or emergency care decisions without knowing your wishes.
4. How These Documents Interact with Aged Care & Retirement Living
Loss of capacity often occurs around the same time aged‑care needs increase. Attorneys and medical decision‑makers may need to:
- Sign aged‑care agreements
- Manage Refundable Accommodation Deposits (RADs)
- Sell property to fund care
- Terminate or vary retirement village agreements
- Approve hospital or medical treatment decisions
Clear documentation avoids delays, enables swift action and ensures decisions align with your values and long‑term plans.
5. Safeguards Against Elder Abuse and Financial Mismanagement
use can occur even within well‑meaning families. Good legal drafting helps prevent it by:
- Setting limits on an attorney’s powers
- Requiring consultation with specified people
- Restricting major decisions without medical confirmation of incapacity
- Providing guidance on how funds should be used
Including these safeguards can significantly reduce the risk of financial misuse or inappropriate living arrangements.
6. Common Mistakes to Avoid
Many issues arise because of avoidable mistakes, including:
- Not appointing someone you trust to carry out your wishes
- Not updating documents after divorce, death of an attorney or family breakdown
- Appointing attorneys who don’t understand the responsibilities
- Relying on outdated or interstate documents that may not comply with Victorian laws
- Preparing documents without legal advice, resulting in invalid or unenforceable appointments
Key Takeaways
Preparing an Enduring Power of Attorney, Medical Treatment Decision-Maker appointment and Advance Care Directive is essential for anyone planning for retirement or aged care. These documents protect your autonomy, reduce family conflict and ensure your financial and medical arrangements reflect your wishes.
Just like your Will, these documents should be reviewed regularly and updated when circumstances change, including where you enter into a retirement village agreement.
