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Chapter 5 Section C: Financial Management and Power of Attorney

A Financial Manager is a substitute decision-maker for financial and property related decisions only.

A Financial Manager may be appointed when a person is considered, at law, to be incapable of managing his or her financial and property related affairs. They may be appointed in a few different ways:

  • the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) under the Guardianship Act 1987 (NSW)
  • the Mental Health Review Tribunal under the NSW Trustee and Guardian Act 2009 (NSW); or
  • the Supreme Court the Supreme Court under the NSW Trustee and Guardian Act 2009 (NSW) or the ‘parens patriae’ element of its inherent jurisdiction.

The circumstances in which these Tribunals and the Court exercise this power varies, and the legal tests that have to be met before a Financial Manager can be appointed also vary to some degree.

In this section you can find out more about:

  • When a Financial Manager will be appointed by the Guardianship Division of NCAT
  • When a Financial Manager will be appointed by the Mental Health Review Tribunal
  • When a Financial Manager will be appointed by the Supreme Court
  • What powers a Financial Manager has
  • The NSW Trustee and Guardian’s role as Financial Manager
  • Review of financial management decisions
  • Cancelling a Financial Management Order
  • Power of Attorney and Enduring Power of Attorney
  • Varying or revoking an Enduring Power of Attorney

5C.1: When will a financial manager be appointed by the Guardianship Division of NCAT?

Most Financial Management Orders are made by the Guardianship Division of NCAT. Before it can appoint a Financial Manager for a person under the Guardianship Act 1987 (NSW), the Guardianship Division of NCAT must be satisfied that:

  • the person is not capable of managing their financial affairs;
  • that there is a need for a Financial Manager to be appointed; and
  • it is in the best interests of the person that a Financial Manager be appointed.

For example, the Guardianship Division of NCAT will consider whether the person is able to deal with their income, property and capital in a reasonable, rational and orderly way, considering their current circumstances and future needs.

Any person with a genuine concern for the welfare of a person who cannot manage their financial affairs can apply to the Guardianship Division of NCAT for the appointment of a Financial Manager.

The Guardianship Division of NCAT can also make an Interim Financial Management Order, which is for a specified length of time up to six (6) months. This order protects a person’s financial affairs while information is being gathered about their capacity to manage their own affairs. A final decision about whether a Financial Management Order is needed must be made before the Interim Order lapses.

The Guardianship Division of NCAT can appoint either the NSW Trustee and Guardian (which is a public official), or a Private Financial Manager. A Private Financial Manager could be a family member or friend of person with a decision-making disability or a trustee company. This person must be over eighteen (18) years old. Private Financial Managers are supervised in the performance of their functions by the NSW Trustee and Guardian.

For more information on Private Financial Managers, see this link.

5C.2: When will a financial manager be appointed by the Mental Health Review Tribunal

If you are a voluntary or involuntary patient or assessable person under the Mental Health Act 2007 (NSW), the Mental Health Review Tribunal can make a Financial Management Order if they are satisfied you are not capable of managing your financial affairs. The Mental Health Review Tribunal does not often make these Orders.

The Mental Health Review Tribunal can only appoint the NSW Trustee and Guardian to manage your financial affairs. The Tribunal cannot appoint a Private Financial Manager. This is a very important difference between the Mental Health Review Tribunal’s powers when compared to the Guardianship Division of NCAT or the Supreme Court. If you have a specific person you would like to be your financial manager, for example a family member or friend, you should tell your lawyer and the Tribunal.

The Tribunal may make this decision at a Mental Health Inquiry or at a hearing convened following a specific application to the Tribunal for such an Order.

For more information about the Mental Health Review Tribunal and its hearings, follow this link.

A Financial Management Order, except for an Interim Financial Management Order, made by the Mental Health Review Tribunal does not lapse or expire if you are discharged from a public mental health facility. Given that this is a significant decision, you should tell the Tribunal if you do not think you can adequately prepare relevant evidence (i.e. bank statements, a letter from a financial counsellor, etc.) for a hearing regarding a Financial Management Order while you are an inpatient.

The Tribunal can make an Interim Financial Management Order, which is an Order that lasts up to six (6) months at most. An Interim Financial Management Order can only be made to enable more information to be gathered and assessed about your capacity to manage your financial affairs.

If you are discharged from the Mental Health Facility, the Interim Order lapses at the end of the period specified. The Mental Health Review Tribunal has no power to make a Financial Management Order following your discharge even if you continue to be subject to an Interim Order for a period following your discharge.

Click here to find the form for requesting cancellation of a financial management order and other information about the Mental Health Review Tribunal and financial management.

Single members of the Mental Health Review Tribunal conducting Mental Health Inquiries have the same powers as a three-person Mental Health Review Tribunal to make a Financial Management Orders for people who are involuntary patients.

A person must have a ‘sufficient interest’ in the financial affairs of the person with decision-making disability to apply to the Mental Health Review Tribunal under the NSW Trustee and Guardian Act 2009 for the appointment of a Financial Manager. This is interpreted broadly, as social workers in public mental health facilities can apply for a Financial Management Order for inpatients.

The Guardianship Division of NCAT and the Supreme Court can also hear an application for a Financial Management Order for any person with a decision-making disability (including a patient of a pubic mental health facility). However, this happens very rarely.

5C.3: When will a Financial Manager be appointed by the Supreme Court NSW?

Under the NSW Trustee and Guardian Act 2009, the Supreme Court can make a financial manager order if it is satisfied that a person is not capable of managing their financial affairs. This does not happen often.

A person must have a ‘sufficient interest’ in the financial affairs of the person with decision-making disability to apply to the Supreme Court for the appointment of a Financial Manager. The Supreme Court can also appoint a Financial Manager on its ‘own motion’ – that is, without anyone making an application. This might happen, for example, if the Court awards a person a large amount of money for damages for an injury and the Court is concerned about the person’s ability to manage those funds.

The Supreme Court can appoint either the NSW Trustee and Guardian (which is a public official), or a Private Financial Manager. A Private Financial Manager could be a family member or friend of person with a decision-making disability, or a trustee company. This person must be over eighteen (18) years old. Private Financial Managers are supervised in the performance of their functions by the NSW Trustee and Guardian.

For more information on Private Financial Managers, follow this link.

Once a Financial Manager Order is made by the Supreme Court, it continues until such time is it cancelled. It is not time limited or subject to review. The Guardianship Division of NCAT can require, at the time it makes a Financial Management Order, that the Order be subject to review at some time in the future, but it does not have to do so.

5C.4: What powers does a Financial Manager have?

The person appointed as your Financial Manager has the authority to make decisions about all of your financial affairs that fall within the scope of their appointment. This could include the authority to operate your bank accounts, pay your bills, make investments for you and approve payments for items or services you may need. Your Financial Manager is able to make decisions in legal proceedings on your behalf and to ensure your interests are protected in legal matters.

A Financial Manager may be appointed to manage all of a your financial affairs, or only particular parts of your estate. For example, you may be viewed as capable of managing your day-to-day financial affairs but as incapable of managing a large share or property portfolio you have received under an inheritance.

Your Financial Manager should always act in your best interests. They should be guided by the following principles from the Trustee and Guardian Act 2009 (NSW) when making decisions, Most importantly:

  • Your welfare and interests
  • Your freedom of decision and freedom of action should be restricted as little as possible
  • You should be encouraged, as far as possible, to live a normal life in the community
  • Your views
  • The importance of preserving family relationships and cultural and linguistic environments should be recognised
  • You should be encouraged, as far as possible, to be self-reliant in matters relating to your personal, domestic and financial affairs; and
  • You should be protected from neglect, abuse and exploitation.

If a Financial Management Order is made, it stops the operation of any Power of Attorney, including any Enduring Power of Attorney that you may have put in place earlier.

Financial managers are sometimes permitted to charge a fee to manage your finances. Usually, Private Financial Managers are not permitted to charge you a fee to manage your finances. However, this may be permitted if your Private Financial Manager is a trustee company, or the Supreme Court has authorised it.

5C.5: The NSW Trustee and Guardian: role as Financial Manager

The NSW Trustee and Guardian is a government agency with a number of functions, including financial management.

They will always charge a fee to be your financial manager. However, in some circumstances you may be able to apply for a fee waiver or reduction for a period of time.

If you want to work towards regaining management of your finances, NSW Trustee and Guardian can allow you to deal with one or some of your financial affairs, such as your pension. They will do this if you have shown the skill and ability to deal with aspects of your financial affairs successfully. Advice in writing from case managers or another professional who knows you is required to support the request.

Click here to find information about the fees charged by the NSW Trustee and Guardian.

Click here to find contact details and office locations for the NSW Trustee and Guardian.

5C.6: Review of financial management decisions

If your Financial Management Order was made by the Guardianship Division of NCAT it may be subject to automatic review because it was a term of the Order. When it reviews the Order, the Tribunal can decide to continue, cancel (‘revoke’), or change the terms of the Order.

Otherwise, if you want the Guardianship Division of NCAT to change the terms of your Financial Management Order you must ask the Tribunal to conduct a review. You do this by filling in a form which requests this review. The Guardianship Division of NCAT has developed an Easy-English kit which explains what you need to do and how to about it. Follow this link for information about the Guardianship Division of NCAT.

Follow this link to read a fact sheet about how to have your Financial Management Order reviewed or revoked.

5C.7: Revoking or cancelling a financial management order

As a general rule, if you want a Financial Management Order cancelled (revoked) or changed, you should make this request to the institution which first made the Order.

If you want the Guardianship Division of NCAT to revoke or change a Financial Management Order that it has made, you need to request a review of the Financial Management Order.

Follow this link for the application form to request a review or to revoke a Financial Management Order.

If you are no longer a person subject to a Guardianship Order and are no longer a patient in a Mental Health Facility, the NSW Trustee and Guardian has the power to terminate a Financial Management Order if it believes you are now capable of managing your own financial affairs. You can ask the NSW Trustee and Guardian to terminate your Order.

If you remain a person under a Guardianship Order, or a patient in a public mental health facility, and the NSW Trustee and Guardian believes you have become capable of managing your financial affairs, the NSW Trustee and Guardian must refer your case to either the Guardianship Division of NCAT or to the Mental Health Review Tribunal which will decide if the Financial Management Order should be revoked. The NSW Trustee and Guardian and you will need to prove to the Tribunal that you are now capable of managing your affairs.

If your Financial Management Order has been made by the Mental Health Review Tribunal, you can apply to that Tribunal to have your Financial Management Order revoked. You will have to prove to the Tribunal that you are now capable of managing your affairs or that it is in your best interests that your Financial Management Order is revoked. You do not have to remain an inpatient in a public mental health facility to make such an application to the Tribunal, you can make this application after discharge.

If your Financial Management Order has been made by the Supreme Court, you must apply to the Supreme Court if you want this Order revoked or changed. You will probably need the help of a solicitor to do so.

If the Guardianship Division of NCAT or the Mental Health Review Tribunal has made a Financial Management Order for you and you believe that this decision is wrong, you can appeal this decision either to the NSW Civil and Administrative Tribunal or to the Supreme Court.

You are strongly advised to get legal advice before you begin this process. You could also contact a financial counsellor to ask for advice on how you can show that you can now manage your own financial affairs. The National Debt Hotline connects you to a financial counsellor closest to where you live for free financial counselling.

5C.8: Power of Attorney and Enduring Power of Attorney

If you have legal capacity, you can nominate a ‘Power of Attorney’, or a person who can make financial and legal decisions on your behalf. This includes buying and selling real estate, shares and other assets, operating your bank accounts and spending money on your behalf.

It is important that you trust the person you are appointing as Attorney to make financial decisions on your behalf. Your attorney must be over 18 years old. They cannot be a person who has been declared a bankrupt. If your financial affairs are complicated, you should appoint an Attorney with the skills to manage complex financial circumstances.

The person who is exercising the Power of Attorney (called ‘the Attorney’) must act in your best interests, not in their own interests or in the interests of other people or organisations. For example, they are not allowed to sell your house and then use the proceeds for their own benefit or the benefit of someone other than you.

If your Attorney does not follow your directions or does not act in your best interests, you should consider revoking the Power of Attorney. You will be able to do this as long as you have legal capacity. If you revoke the Power of Attorney, you should notify the person in writing and they must stop acting as your Attorney as soon as they know you have made the revocation.

Your Attorney must keep their own money and property separate from your money and property, unless you are joint owners, or operate joint bank accounts. Your Attorney should keep reasonable accounts and records about your money and property. The Attorney can charge you money as a fee for providing and maintaining these records.

An Attorney cannot make decisions about your lifestyle or health. These decisions can only be made by a Guardian.

You can also appoint an Enduring Power of Attorney, who will have the authority to manage your legal and financial affairs if you lose capacity in the future. You must have legal capacity at the time you appoint your Enduring Power of Attorney. They must be over 18 years old.

Once you lose legal capacity, you cannot revoke this Enduring Power of Attorney.

If you have made an Enduring Power of Attorney in another Australian state or territory, it will be recognised in NSW.

An Enduring Power of Attorney granted in NSW is recognised in Queensland, Victoria and Western Australia, but not in any other state or territory at the moment. The law is progressively changing, so you should check to see if this information remains up to date. If you have property in other states or territories, then you should get legal advice as to whether the granting of the Power of Attorney will be valid where you have property or other assets. You may have to prepare another Enduring Power of Attorney for that state or territory.

However, an Enduring Power of Attorney which has been made in another country will not be recognised in NSW.

You should get legal advice before nominating an Enduring Power of Attorney, and have a lawyer prepare the document granting an Enduring Power of Attorney. This document must be signed by an approved witness. If your Enduring Attorney is signing documents that affect real estate, the Power of Attorney must be registered at NSW Land Registry Services. Follow this link to find out about getting legal help.

The NSW Trustee and Guardian can also give you advice about, and can prepare and register an Enduring Power of Attorney for you. The NSW Trustee and Guardian will charge you for this service,

5C.9: Varying or revoking an Enduring Power of Attorney

The Guardianship Division of NCAT and Supreme Court of NSW have the power to revoke or change an Enduring Power of Attorney or remove the Attorney and appoint someone else in their place.

The Guardianship Division of NCAT or the Supreme Court may do so if the person you have granted your Enduring Power of Attorney is not acting in your best interests. If you think this is happening, you should apply to the Guardianship Division of NCAT or to the Supreme Court requesting a review of the Enduring Power of Attorney. If the situation is urgent, you are probably best advised to contact the Guardianship Division of NCAT as it may be able to deal  with the matter immediately:

Freecall*: 1300 364 103

Interpreting Service 131 450

* Please note, mobile phone calls to freecall numbers (numbers starting with 1800) are charged to the caller at the usual mobile rate.

When you contact the Guardianship Division of NCAT, you should make it clear that you think you are in danger of losing your assets or property. The Supreme Court can also deal with applications on an urgent basis. However, you will probably need the help of a lawyer to bring the matter to the Court.

The Guardianship Division of NCAT and Supreme Court of NSW can reinstate an Enduring Power of Attorney that has lapsed because the Attorney has ceased to act (for example, if the Attorney dies) and replace the original person with another suitable person. They can require an Attorney to provide accounts, bank statements and so on, so that an audit can take place. They can also ask the Attorney to have a financial management plan for you.

If there is a dispute as to whether an Enduring Power of Attorney is valid, the Guardianship Division of NCAT and the Supreme Court can also decide whether you had legal capacity when you first signed the document granting the Enduring Power of Attorney. They have the power to declare the granting of an Enduring Power of Attorney invalid if you did not have capacity at the time you signed it. The Guardianship Division of NCAT and the Supreme Court can also make an Order to the effect that the Enduring Power of Attorney has come into force because you have become incapable, at law, of managing your financial affairs even if you disagree that this is the case.

For more information about Power of Attorney and Enduring Power of Attorney and planning ahead click here.

Follow this link for more information about hearings before the Guardianship Division of NCAT.

Updated March 27, 2020