Navigating Financial Management in Australia: Understanding Your Options
In Australia, financial management for individuals who lack the capacity to handle their own affairs is a carefully regulated process aimed at balancing protection with autonomy. Whether due to age, injury, or other circumstances, some individuals require assistance in managing their finances.
Understanding the available options for financial management is not only crucial for the individuals themselves but also for their families and caregivers.
The Basics of Financial Management
Financial management involves the control, management, and decision-making exercised by a designated person or entity over the financial affairs of an individual who lacks the capacity to manage them independently. This individual, a “protected person”, may have their financial affairs overseen by a “financial manager” or administrator appointed through formal legal processes.
Key components of financial management include:
- Capacity Assessment
Determining whether an individual lacks the capacity to manage their finances independently.
- Appointment of Financial Manager
Designating a trusted individual or entity to act as the financial manager.
- Legislative Guidelines
Adhering to legal principles and guidelines governing the financial manager’s responsibilities. These guidelines are in place to safeguard the interests of the protected person and prevent any misuse or mismanagement of funds.
- Financial Decision-making
Authorising financial decisions on behalf of the protected person, including investments, expenses, and legal matters related to their estate.
- Ongoing Oversight
Regular monitoring and reporting are essential to ensure compliance with legal requirements and the protection of the protected person’s interests. Financial managers must provide detailed accounts of financial activities and seek approval for major decisions.
Formal and Informal Arrangements
While informal arrangements, such as assistance from family members or friends, may suffice in some cases, formal financial management orders are often necessary. These orders can be obtained through local Guardianship and Administration Tribunals or the Supreme Court of New South Wales, depending on the jurisdiction and circumstances.
Options for Financial Managers
Adults without financial capacity typically have several options for appointing financial managers:
- Public Trustees
Government agencies established to provide trustee services, offering subsidised fees and comprehensive services but may be criticised for the level of service provided to protected person.
- Private Trustee Companies
For-profit entities providing expert professional trustee services, often preferred for their personalised customer-focused approach and expertise in managing large personal injury settlements.
- Individuals
Family members or other trusted individuals with experience managing large sums of money can also be appointed as financial managers, offering familiarity and personal attention but potentially facing challenges such as conflicts of interest and administrative burdens.
Making Informed Decisions
When selecting a financial manager, it’s essential to consider factors such as:
- Suitability
Ensuring the chosen manager is compatible with the protected person’s needs and capable of fulfilling their responsibilities.
- Quality of Service
Assessing the reputation and track record of potential managers, whether public trustees, private companies, or individuals.
- Cost vs. Benefit
Weighing the fees associated with different options against the quality of service and level of support provided.
- Legal Considerations
Adhering to legislative requirements and guidelines governing the appointment and conduct of financial managers.
Conclusion
Financial management in Australia is a complex but essential aspect of safeguarding the interests of individuals who lack the capacity to manage their own affairs. By understanding the available options and carefully evaluating the suitability of potential financial managers, families and individuals can navigate this process effectively, ensuring the protection and well-being of those in need. Whether opting for public trustees, private trustee companies, or individual appointees, the goal remains the same: to provide comprehensive support and ensure responsible financial management for vulnerable individuals across the country.
Written by Karina Goodall
Karina Goodall is a Practice Group Leader and Director at Stacks Goudkamp specialising in protective division applications, financial management applications for protected persons, motor vehicle accident claims, and superannuation and TPD claims.
