Creating your financial support team

In this section you will:

Learn how to pick the right support team for you
Learn how to create a power of attorney that minimises the risk of abuse
Be equipped with some simple tools to help you select and manage your power of attorney

Everything in life is easier when we have support, especially as we age. Having a carefully chosen ‘financial support team’ of personal and professional contacts ready to help you is a great step in planning your future.

For example, the team could:

provide you with appropriate financial, legal or health advice
help you plan and provide for your future, including a comfortable retirement
assist you with setting up your financial affairs to safeguard against abuse
plan for a time when you might be unable to manage your finances (if your mental or physical health weakens)
support you in considering and setting up a power of attorney—or another type of authority—to assist you with future financial and legal matters. (You can read more about these authorising documents further down.)

The financial issues that affect older people are unique, but early preparation can help to avoid problems later. Choosing a financial support team now, while you are able to, will go a long way towards providing you with the future you want.

Who could be on your financial support team?

A combination of people you have professional and personal relationships with would be ideal. Think about who might be best for your circumstances. Each team member should know you and your circumstances well and have the appropriate skills and knowledge to help you.

Top tips for choosing your support team

Read more about future planning on Compass. Understanding what it is and why it’s important will help you decide what you want from your team.
Make sure that the people in your team are the right ones to help manage your financial affairs. They may be perfect for helping with other matters, but will they be as good with your money decisions?
Understand that family members may or may not have the right skills and qualities or the capacity to help you. You don’t have to include certain family members just because they expect to be included. Choose the most suitable people, whether family or not.
Check in regularly with your doctor. Ask them to inform a trusted friend or family member if your health significantly declines, and tell them who you’d like them to contact.
Keep written records of any family agreements you have in place. Plans made verbally are easily forgotten or misunderstood. And strongly consider getting legal advice whenever you make an agreement within the family, to help avoid problems arising later.
Let your bank know of any concerns you have regarding people’s access to your accounts.
Review your personal and professional relationships at least once a year. Have you changed to a different accountant? Has your relationship with a family member declined? For many reasons, you may need to change your team members or update your power of attorney.

You could consider asking:

family members
friends
your doctor(s)
bank staff
your lawyer (or a community legal centre)
an accountant
a financial adviser.

Family members

Family is an obvious choice to help with financial, legal and health-related matters, and the support of loved ones can be important for everyone. However, if you are considering appointing a power of attorney (or any other type of decision-making authority), family is just one option.

You are not under any obligation to give decision-making rights to your son, daughter or any other relative. Consider your own relationship with each family member, and think about whether they have the right capabilities, intent and time to assist you—now and in the future.

It is important to share your wishes and preferences with people you trust while you are healthy and not under any kind of pressure. It’s entirely up to you how much you want to discuss with each family member, and what sort of authority you give them over your money.

If you’re not confident that a particular family member will have your best interests at heart, choose someone else. But if you’re sure they will, and they know you well, they could be a great choice for your financial support team.

Friends

Like family members, close friends probably know you well and are likely to be people you consider for your support team. However, like family, they should also have the skills, time and willingness to provide you with the best possible support.

Think about how long you’ve known them, how well they know you and understand your wishes and preferences, and whether they have good decision-making skills. It’s also important to consider their age and health, in case these factors could affect their ability to support you.

And just like with family, no matter how much a particular friend might want to help you, there’s no obligation for you to add someone to your financial support team if you feel they might not do the best job.

Your doctor(s)

Doctors play an important role in assessing and maintaining your health. They can also play a significant role in determining your legal capacity to manage your financial affairs. This is critical if your power of attorney will come into effect if you become unwell.

Develop a close relationship with your doctor and discuss these issues now. Ask your doctor what ‘capacity’ and ‘lost capacity’ could look like, how often you should be assessed, and who should be alerted if your health declines. Have regular medical check-ups as often as is appropriate for you in the context of your physical and mental health.

Bank staff

Bank staff can help you with the everyday management of your finances and direct you to the right type of products and services for your needs and age. They can’t set up a power of attorney document for you, but they will keep a copy of yours on file if you give them one. This will allow the bank staff to refer to your wishes and preferences if necessary. (Remember to give them a new copy if you change your power of attorney.)

They can also help you arrange an ‘authority to operate’. This enables a family member, accountant or other trusted person you nominate to make transactions on one or more of your accounts that you grant them access to.

Your bank can act as a useful partner in helping prevent, detect and stop elder financial abuse. You can ask bank staff to help protect you by creating limits on transactions, and they can also investigate any suspicious transactions you see on your accounts.

Your lawyer (or a community legal centre)

Lawyers can play a significant role in helping to prevent abuse or unintended financial harm by formalising family agreements, such as granny flat or guarantor arrangements, or gifts and loans. They can also assist in situations where financial abuse is suspected or experienced.

A lawyer can help you to draft your will and to understand and create power of attorney documents. They will then provide the associated documentation for you to share with your bank or accountant.

You might feel you can attend to these tasks without a lawyer. However, the cost of not seeking legal advice on these matters can be devastating if your relationships break down or you simply don’t understand the implications of your choices.

If you don’t have a lawyer, you can find one near you through your state or territory’s law society or institute, which is the professional association of law practitioners. Their websites have a directory search tool available to the public. See the Resources section at the end of this article.

Free legal advice is also available if you need it. Community legal centres located across the country and your State Trustee or Guardian may be able to assist you. See the list at the bottom of this page.

An accountant

Accountants help you with complex matters relating to tax, business ownership and property management, especially later in life.

As you get older, you may no longer have the desire or ability to stay on top of these matters yourself. If you haven’t engaged an accountant before, now could be a good time to consider doing so.

An accountant is likely to have good visibility of your transactions and everyday spending, so they will be able to provide you with reliable financial advice. They may also be able to spot unusual or suspicious transactions occurring in your accounts.

If you have an accountant, tell them about your power of attorney instructions and wishes so they can keep a lookout for any suspicious behaviour. You could give them a copy of your power of attorney documents to keep on file for their reference.

A financial adviser

Not everyone has a financial adviser, but if you do, they can help you with planning for retirement and managing your finances more generally.

To make the most of financial planning, it’s important not to leave it too late, so consider getting an adviser now if you don’t have one already.

It’s also important to have an appropriate level of investment risk that you are comfortable with. A good financial planner will consider this when making their recommendations.

If you own your own business, your financial adviser and accountant could work together to help you with your business affairs.

Every team needs a captain

Any good support team needs a good leader, and now—while you’re fit and able—is the time to choose someone to take the lead if you need them to.

When might you need your ‘captain’ to act for you?

You might be surprised by the number of situations in which you could want your ‘team captain’ to do something to support you. For example:

you are experiencing (or planning for) a decline in your mental health
you are injured, immobile or experiencing physical ailments that make it difficult to get around
you are in hospital
you are travelling in or deployed to a foreign country
you live remotely and find it difficult to access services
you have difficulty managing your money yourself.

You can appoint your ‘team captain’ through a power of attorney. This is a legal document that allows you to nominate someone to act on your behalf in certain matters, including financial.

There are 2 types of powers of attorney, and you can read more about them further on in this article.

Banner image with the words: courage, knowledge, integrity, availability and financial sense

5 qualities every team captain should have

Integrity: they will act in your best interests by saying and doing what is right.
Financial sense: they are good at managing their money and your money.
Availability: they have the time to assist and can help at short notice.
Courage: they will stand up for your rights and deal with other people for you.
Knowledge: they will take the time to understand what they can and can’t do and will take their role seriously.

Top tips for choosing your ‘team captain’

Start thinking about your power of attorney now, while you’re in good health and have time to prepare it.
Powers of attorney are not just for older people—they can be relevant for people of any age. Travelling overseas can be a good prompt for making a power of attorney.
Visit the ‘Choosing an attorney’ page on Compass for an overview of your options and things to consider.
Consider the ‘5 qualities every team captain should have’ that you read above. Remember that this person does not have to be a family member.
Work with a lawyer or State Trustee to set up your power of attorney and ensure that all proper processes are followed.
Be specific and deliberate about the powers you are assigning. Your instructions can generally be as detailed as you like.
Remember that you can cancel or change your power of attorney at any time while you still have decision-making capacity. You can also grant authority for a specific period of time only.
Consider setting limits on transactions or assigning authority to multiple people to reduce risk.
Regularly review any people you have nominated as your attorney or as a third party authority and check that your bank has the most current records.
If you ever change your power of attorney, make sure to cancel the previous one in writing to anyone who has a copy. Let your bank know about the change straight away.

3 ways to appoint your ‘team captain’

Once you’ve decided who would the best person to head your financial support team, the next step is to formalise your decision and authorise them to act for you. This will also ensure that your whole team knows who is to lead.

To make it official, you could make one or more of 3 documents.

1. General power of attorney (POA)

This gives one or more people the authority to act for you in financial and legal matters, such as:

buying and sell real estate or shares
operating your bank accounts
spending money on your behalf
allocating gifts.

You can choose when it comes into effect, for how long, and for what purpose. This type of attorney can be useful when you have a specific period for which you need someone to act on your behalf.

A POA is only effective while you have the capacity to make and communicate decisions for yourself. If you lose decision-making capacity, the POA cannot operate.

2. Enduring power of attorney (EPOA)

This authorises someone, as your attorney, to make financial decisions on your behalf and continues if you lose capacity. You can tailor it to meet your needs, impose limits on your attorney’s powers, and (in some state and territories) choose when it comes into effect.

An EPOA is important for giving you a say in what happens to your finances and affairs if your health deteriorates. You can only appoint an attorney under an EPOA while you have capacity—if you lose capacity, the opportunity to appoint someone is gone.

EPOAs usually work well, but they establish a significant amount of authority over your affairs and can have different applications, depending on the state or territory you live in.

Getting legal advice when making an EPOA is strongly recommended. For legal help, see the Resources list at the end of this article.

3. Third party authority

An ‘authority to operate’, or ‘third party authority’ (TPA), is a special type of authority that your bank can offer you in relation to your bank accounts.

A TPA gives another person access to one or more of your bank accounts without going through a full power of attorney process.

It is arranged directly through your bank and allows the nominated person to perform transactions on specific accounts only. The person you nominate will not be able to do things they are not authorised to do, such as opening new accounts or cards.

TPAs only apply to personal accounts (so, for example, you cannot give another person access to your loan accounts or credit cards). You can cancel a TPA at any time simply by contacting your bank.

It’s important to realise that powers of attorneys and TPAs can coexist, which means that multiple people may have access to the same accounts.

However, unlike a power of attorney, a TPA does not confer any legal power on the person to act on your behalf outside of accessing specific bank accounts.

Be aware of the risks

There is no national register for powers of attorney (yet). So the only way your bank, accountant and other financial services will know what your current attorney arrangements are is if you provide them with copies of the formal documentation. Setting up a new power of attorney doesn’t automatically cancel an old one, so make sure to update everyone on your support team with copies of any new POAs as soon as you make one.
Powers of attorney can, unfortunately, become tools of abuse. Picking the right attorney, and making sure they understand what your wishes are, is critical. Make sure you appoint someone you fully trust. Remember, you can specify or limit what they can do in the power of attorney. Getting legal advice when you make your POA or EPOA is the best way to mitigate any likelihood of abuse.
Your ‘default’ choice may not be the right person for the job. There are many people you may want to consider giving power of attorney to, but you need to think carefully and make the right choice for you. It doesn’t have to be a family member—sometimes, family members may not have the right ability, capacity or qualities to do a good job for you.
TPAs also carry a degree of risk. Think carefully about who you give authority to. Talk to your bank staff before giving the authority, and authorise only as much access to your accounts as is necessary.
If you have any concerns or reservations about giving someone authority, reconsider your choice.

Resources

National

Community Legal Centres Australia—access a directory of community legal centres in all states and territories

Compass ‘Power of attorney’ webpage—information about making powers of attorney in each state and territory

Compass ‘Misuse of enduring power of attorney’ webpage—information about what can sometimes happen and how to prevent it

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Acknowledgement

This article is from the Safe & Savvy guide, a publication that was developed by the Commonwealth Bank of Australia (CommBank) Customer Advocate, together with a large range of community and academic experts.

References

Safe & Savvy - A guide to help older people avoid abuse, scams and fraud. November 2019

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