What Happens If Someone Loses Capacity Without a Power of Attorney?

Losing capacity without a Power of Attorney (POA) in place can create significant legal, financial, and personal complications for individuals and their families. Without a legally appointed decision-maker, loved ones may face hurdles in managing financial affairs, accessing funds, or making critical medical decisions. At Craigieburn Lawyers, we specialise in assisting individuals and families with estate planning and Power of Attorney matters, ensuring that legal safeguards are in place to avoid unnecessary stress and complications.

What Does It Mean to Lose Capacity?

Losing capacity refers to the inability to make informed decisions due to an illness, injury, or condition that affects mental function. This could result from:

• Dementia or Alzheimer’s disease

• Stroke or brain injury

• Severe mental illness

• Coma or unconsciousness due to an accident

• Other medical conditions affecting cognitive abilities

When an individual loses capacity, they are no longer legally able to make financial, personal, or medical decisions. This is why having a valid Power of Attorney in place is essential to ensure that a trusted person can manage affairs on their behalf.

The Consequences of Losing Capacity Without a Power of Attorney

1. Financial Accounts May Be Frozen

Without a Power of Attorney, family members or loved ones cannot automatically access bank accounts, pay bills, or manage financial assets. Even if a spouse or adult child wishes to handle everyday expenses, they may be legally unable to do so without court intervention.

2. Family Members May Have to Apply to VCAT

In Victoria, if a person loses capacity and has not appointed an Enduring Power of Attorney, their family or loved ones must apply to the Victorian Civil and Administrative Tribunal (VCAT) to be appointed as a financial administrator or guardian.

• This process can be lengthy, expensive, and emotionally stressful.

• There is no guarantee that the person you would have chosen will be appointed.

• The court may appoint the Public Advocate or an independent administrator if family members disagree or if there is no suitable candidate.

3. Delays in Making Urgent Financial or Medical Decisions

If an urgent financial or medical decision needs to be made, the absence of a Power of Attorney can result in significant delays.

• For financial matters, a family member may need to wait for a court decision before accessing funds to pay for medical care, mortgage repayments, or household expenses.

• For medical decisions, doctors will consult the legal hierarchy of decision-makers, which may not align with the individual’s personal wishes.

4. Risk of Family Disputes

When there is no Power of Attorney, family members may disagree on who should take responsibility. Disputes can arise over financial management, medical care, or living arrangements. In some cases, these conflicts lead to legal battles, further delaying critical decisions and causing emotional strain on the family.

5. The Public Guardian or Administrator May Be Appointed

If no suitable family member or friend is available to take on the role, VCAT may appoint an independent administrator or guardian to manage financial and personal affairs. This could mean:

• A government-appointed professional making decisions on behalf of your loved one.

• Limited control over how financial and personal matters are handled.

• Higher administrative costs, as professional administrators charge fees for their services.

6. Loss of Control Over Personal and Medical Care

Without a Power of Attorney, personal care and medical treatment decisions may be made by a legal representative rather than a trusted family member. This means:

• The person’s wishes regarding medical treatment, end-of-life care, or living arrangements may not be respected.

• Family members may have little to no say in crucial decisions.

• There is a risk of decisions being made based solely on legal or medical protocols, rather than personal values.

7. Issues with Property and Assets

If you own property and lose capacity without a Power of Attorney, your family may struggle to manage or sell assets if needed.

• If a house needs to be sold for medical or aged care costs, legal intervention will be required.

• Investments and businesses may be left unmanaged, leading to financial losses.

• Delays can cause hardship and prevent essential decisions from being made in a timely manner.

8. Complications for Business Owners

For business owners, losing capacity without a Power of Attorney can be disastrous.

• Contracts, payroll, and business transactions may be halted.

• Business operations could be disrupted, impacting employees and clients.

• Without a designated legal representative, business assets and decisions may be subject to lengthy legal proceedings.

How to Avoid These Issues – Get a Power of Attorney in Place

The best way to prevent these complications is to establish a legally valid Enduring Power of Attorney and Medical Treatment Decision Maker while you still have capacity. At Craigieburn Lawyers, we specialise in preparing legally sound Power of Attorney documents to ensure:

• Your financial and personal matters are handled by someone you trust.

• Medical decisions are made according to your wishes.

• Your family avoids unnecessary legal processes and disputes.

How Craigieburn Lawyers Can Help

At Craigieburn Lawyers, we offer expert legal assistance in drafting, reviewing, and executing Power of Attorney documents. Our experienced team will guide you through:

• Choosing the right person to act as your attorney.

• Understanding the different types of Powers of Attorney and their roles.

• Ensuring your documents comply with Victorian law.

• Safeguarding your financial and medical wishes.

Why You Should Act Now

Many people delay setting up a Power of Attorney, assuming they have plenty of time. However, accidents and unexpected health conditions can occur at any time. Taking proactive steps now will ensure:

• Your financial, medical, and personal affairs are protected.

• Your loved ones avoid unnecessary legal and financial stress.

• Your assets and interests are handled according to your wishes.

Conclusion

Losing capacity without a Power of Attorney can lead to financial hardship, family disputes, and loss of personal autonomy. The legal process to appoint a decision-maker can be time-consuming and stressful for loved ones. By taking action now and setting up a Power of Attorney with Craigieburn Lawyers, you can ensure peace of mind for yourself and your family.

Don’t wait until it’s too late—contact Craigieburn Lawyers today to discuss your Power of Attorney needs and secure your future.