The various financial issues that can potentially be faced by older clients are of significant importance for both the older person and his or her family. As a result, financial issues should be considered in detail whenever advising older clients. These issues include everyday dealings an older client may have with family, aged care facilities, banks and government agencies, as well as the need to take steps to ensure the person’s finances are properly dealt with in the event that he or she is no longer able to make financial decisions him or herself.

The importance of having a valid and appropriately drafted enduring power of attorney in place cannot be overstated. It allows the principal to determine who would be the best person to manage his or her finances in the event he or she no longer had capacity to do so.

The very fact that such a power is enduring (that is, continues notwithstanding the principal has lost capacity) is what makes it so powerful. A principal who has lost capacity is unlikely to be able to revoke the power of the attorney, even if he or she does not agree with the decisions the attorney is making. Indeed, if capacity has been lost, the principal may not even be in a position to properly evaluate (or even be aware of) the decisions the attorney is making.

Accordingly, it is important that the client give careful consideration to whom he or she wishes to appoint, the extent of their powers, and any directions as to the use of those powers. Having decided upon a person or persons the client trusts to carry out such an important role, it is of course vital that practitioners prepare an appropriate document to validly give effect to that decision.

See Enduring powers of attorney.

In situations where a person does not have capacity and either does not have a valid power of attorney in place or the power of attorney is subject to proceedings for review or revocation, a financial management order can be made by the court or appropriate tribunal. A financial management order empowers a person (or the jurisdiction’s relevant Public Trustee authority) to make financial decisions on behalf of the person who has lost capacity.

See Financial management orders.

Many older Australians are eligible for the age pension and other concessions from the Australian government. These benefits can have a significant effect on the income, assets, and general financial position in which people find themselves later in life. Accordingly, it is important to know the benefits available and eligibility criteria. If a client may be eligible for benefits, any financial decision being considered in the future should take into account whether there may be any detrimental effect on the pension or other benefits.

See Centrelink issues.

Although many people's primary desire is to age in their own home, and programs have been developed to provide assistance for older Australians living at home, there comes a time for many older Australians when they wish, or need, to move into accommodation specifically designed to cater for older people's needs. These can take the form of aged care facilities or retirement villages. Each type of facility comes with its own financial issues which must be carefully considered. In particular, it should be noted that significant changes to the costs of aged care facilities were introduced by the federal government on 1 July 2014.

See Aged care facility and retirement village contracts.

Reverse mortgages involve money being advanced to a person who owns their own home. There are no repayments, and the loan amount and accumulated interest is deducted from the proceeds of sale of the house, which usually occurs when the person downsizes, moves into an aged care facility or retirement village, or dies. Reverse mortgages are popular with many older Australians, who frequently fit the “assets rich, income poor” profile of those to whom reverse mortgages are targeted.

See Reverse Mortgages.