Understanding Administration and Guardianship Orders in Victoria

Life can take unexpected turns, and when someone loses the ability to make decisions – perhaps due to dementia, stroke, or cognitive decline – it is critical to ensure that their wellbeing and interests are protected.

Power of Attorney are generally prepared to grant other people the power to make financial and/or personal decisions on your behalf, in case you ever lose capacity or are unable to make these sorts of decisions yourself.  Powers of Attorney differ from a Will as they are only valid and applicable whilst you are alive, and the powers granted in a Power of Attorney document cease when the person who made the document passes away.  Comparatively, a Will only comes into effect after death.

If there is no Enduring Power of Attorney in place, legal support may be required to step in and help. That’s where an application to the Victorian Civil and Administrative Tribunal (VCAT) for Guardianship and/or Administration Orders may come into play.

What are Guardianship and Administration Orders?

In Victoria, if a loved one has lost the requisite mental capacity to manage their own affairs and they do not have an Enduring Power of Attorney in place, someone will need to apply to VCAT for legal authority to act on their behalf.

• Administration Orders appoint an Administrator to manage financial and legal matters – think banking, bills, and contracts.
• Guardianship Orders appoint a Guardian to make personal decisions, such as where the person lives, who they live with, and what activities they can participate in.

Sometimes, both types of orders are needed, but other times only one type of Order may need to be issued, depending on the circumstances. VCAT at the individual’s ability to make specific decisions. For example, someone might be able to choose what to eat for lunch and what to wear each day but not understand complex financial risks and decisions.

What types of decisions can I make as a Guardian or Administrator?

VCAT uses different terminology to that which we use when preparing Estate Planning documents.  If someone has an Enduring Power of Attorney in place, then ‘personal’ powers granted under a Power of Attorney document are similar to those covered by Guardianship powers, and ‘financial’ powers granted under a Power of Attorney document are similar to those captured by Administration powers.

More specifically, Administration Orders grant the applicant(s) the power to make decisions about the incapacitated person’s:

• Managing the person’s finances, including their bank accounts and investments
• Making decisions about how the person spends and saves money
• Determining what is done with the person’s property (including selling, or renting out, if necessary)
• Taking legal action on the person’s behalf that may affect their financial position
• Entering into contracts on the person’s behalf
• Paying off any debts or fines owed by the person

Conversely, Guardianship Orders grant the appointed person(s) the power to make the following types of personal decisions about the incapacitated person:

• Where they live;
• Who they interact with (including restricting access, if necessary);
• What medical, dental and other health care the person receives;
• What support services they receive (such as Meals on Wheels); and
• Where they work.

When will VCAT make these types of Orders?

VCAT will only approve the appointment of a Guardian and/or Administrator if:

• The person does not have a valid Power of Attorney document in place;
• Medical evidence shows they are unable to make financial and/or personal decisions on their own; and
• VCAT is satisfied that making such an Order will promote the person’s personal and social wellbeing.

The law in Victoria prioritises preserving a person’s autonomy. Under the Guardianship and Administration Act 2019, VCAT must assume that the person has decision-making capacity unless proven otherwise (by way of medical evidence, such as a letter or report from the person’s regular treating medical physician).

If multiple people want to take on the role of Guardian and/or Administrator, then they can all be appointed (if VCAT determines that it is best for the person) but things can get complicated. Disagreements between family members can lead to delays, extra legal costs, and emotional strain – especially when the application becomes contested.

VCAT can make Orders that appoint someone, or multiple people, to be a person’s Guardian and Administrator with the power to make decisions outright on that person’s behalf.

Alternatively, the relevant legislation also permits the appointment of supportive decision-makers. With the right assistance, individuals with disabilities or those who lack mental capacity can continue making choices about their own lives, but with someone else appointed to help guide them and support them when making such decisions.

It’s about empowerment, not replacement.  Regardless of the situation, if an application to VCAT is required, there are a variety of avenues we can take when asking for Guardianship and Administration Orders to ensure that the person’s dignity and sense of self is maintained.

What are the duties and obligations of a Guardian and Administrator?

Guardians and Administrators have distinct legal responsibilities to act in the best interests of the person they support, with a focus on personal and financial matters respectively.

For a Guardian, their obligations include:

• Acting honestly, diligently, and in good faith at all times
• Giving effect to the person’s will and preferences wherever possible, unless doing so would cause serious harm
• Consulting with the person and involving them in decisions to the greatest extent possible
• Promoting the person’s personal and social wellbeing, including preserving relationships and cultural connections
• Protecting the person from abuse, exploitation, and neglect
• Supporting the person to develop or regain decision-making capacity, where feasible

For Administrators, their obligations are similar, but can also include:

• Acting honestly, diligently, and in good faith at all times
• Giving effect to the person’s will and preferences wherever possible, unless doing so would cause serious harm

• Consulting with the person and keeping them informed about financial decisions
• Keeping accurate and complete financial records, including receipts and statements
• Avoiding conflicts of interest and not using their role for personal gain
• Protecting the person from financial abuse or exploitation
• Supporting the person to make their own financial decisions, where possible

 Take Control While You Can

Rather than leave it to fate (and VCAT), you can take proactive steps now to ensure your future choices stay in trusted hands.

Enduring Powers of Attorney (compared to general Power of Attorney documents) remain valid even after you lose decision-making capacity and can be accompanied by an Appointment of Medical Treatment Decision Maker document (previously known as a Medical Power of Attorney), Advanced Care Plan (also known as an Advanced Care Directive), and a Will, thereby ensuring that you have a comprehensive Estate Plan in place.

Creating an Enduring Power of Attorney allows you to:

• Appoint someone (or multiple people) you trust to handle your financial, personal, and medical decisions;
• Talk through your values and preferences with them; and
• Give them the confidence to act in ways that reflect your wishes.

Without one, VCAT may choose someone unfamiliar, even an independent professional, who might not share your priorities or know your values.  Our experienced team can guide you in selecting the right people for these roles, and help tailor the legal powers they receive so everything reflects your intentions.

Supporting Someone Else Who Needs Help?

If someone close to you doesn’t have decision-making capacity and hasn’t got a Power of Attorney document in place, you may wish to apply to VCAT on their behalf.

We recommend seeking legal advice to understand your options, navigate the application process and ensure the best possible outcome for your loved one.

More Information

For my information on the topic of capacity, Powers of Attorney, and what happens if someone is experiencing cognitive decline, we invite you to listen to our recent Podcast episode:

Should you otherwise wish to discuss any of the matters raised in this article, or to make an initial appointment with one of our lawyers to discuss a possible VCAT application, please contact our Wills, Estates & Succession Planning team on (03) 5273 5273.