This is the second post in our series covering different advance planning documents. We recommend reading our previous post on Powers of Attorney and Appointments of Medical Treatment Maker before reading this post. In this post, we look at Advance Care Directives, Advance Statements for Mental Health and Company Powers of Attorney.

Advance Care Directive

An Advance Care Directive sets out your preferences for medical treatment, should you be unable to make those personally. There are two kinds of Advance Care Directives: instructional directives and values directives.

Instructional directives should expressly state which procedures you consent to or wish to refuse so that the document operates as if you were to give consent to, or refuse, such a treatment on the day. For example, an instructional directive could include express consent to the use of a ventilator in the circumstances of respiratory failure, or express refusal of CPR if there was a chance of there being significant impairment as a consequence of the medical event.

If you have lost decision-making capacity but have an instructional directive in place, a health practitioner must give effect to that directive, unless the excluded treatment is deemed by them not to be clinically appropriate.

Value directives do not specify which treatments you consent to or refuse; rather, they contain statements about preferences and values which will then provide guidance for any medical treatment decisions. An example of a suggested statement is ‘if I cannot recognise my children, I no longer wish to receive medical treatment’ or ‘I would like my treating health practitioners to take all reasonable steps to prolong my life’. Again, if you have lost decision-making capacity but have an appropriately worded directive in place, a health practitioner and your medical treatment decision maker must consider such values directive(s) when making their decisions.

Advance Care Directives are therefore important for ensuring that your wishes for your physical health are carried out.

Advance Statement for Mental Health

An Advance Statement for Mental Health is similar to an Advance Care Directive, but operates specifically to give instructions on treatment should you require compulsory hospitalisation under the Mental Health Act 2014. We recommend making an Advance Statement for Mental Health if a client has previously been hospitalised due to mental illness.

The directives may include:

  • Treatments and strategies that you have found helpful in the past
  • Conversely, treatments and strategies that you have not found to be helpful
  • Preferences for or against certain types of treatment, such as particular drugs or electroconvulsive treatment

Whilst a psychiatrist must have regard to the treatment preferences expressed in the Advance Statement, it is also permissible to include matters which are “non-binding” but which may be useful for your treatment team, such as details of your general health, daily routine and dietary preferences.

Company Power of Attorney (also known as Corporate Power of Attorney)

A Company Power of Attorney appoints someone to act on behalf of a company (rather than one issued by its officers which only relates to actions which may be undertaken on their behalf personally). These Powers are usually created by company directors or board and take effect should the director(s) lose decision-making capacity.

It is also possible to make a Company Power of Attorney for a fixed term to cover situations such as where a director is overseas and needs someone to carry on the business in Australia. An attorney for a company can do anything that a company director can lawfully do, such as:

  • Oversee the operations of day to day affairs
  • Issue or cancel shares in the company
  • Grant options over unissued shares in the company
  • Distribute any of the company’s property (which includes dividends) among the members

As referred to in our previous post on Powers of Attorney, a Company Power of Attorney is a straightforward method of allowing an attorney to have control of an SMSF where the trustee is a company and to be able to make all decisions that the trustee company of the SMSF can make in such capacity subject to the provisions of the trust deed.

A Company Power of Attorney is also important for the execution of documents. Under Section 127 of the Corporations Act 2001, most companies can only execute a document with the signature of two directors or a director and a company secretary. If one director loses capacity and does not have a Power of Attorney in place, it becomes very difficult to carry out any business of the company. If spouses are co-directors of a company and, for example, the company owns real estate, the spouse with capacity would not be able to sell that property to fund the member’s retirement or care without a valid Power of Attorney granted by the company in place.

Accordingly a Company Power of Attorney resolves any such issues of directors or secretaries losing capacity. It has the effect of appointing an agent of the company (the attorney) who can execute contracts alone under Section 126 of the Corporations Act. This provides security for the equity holders should the directors be unable to oversee the management of its affairs.

If you do not have advance planning documents in place, it’s time to consider which of the above documents (and those covered in Part One) are right for you. Contact Tony today to tailor your Estate and Succession Plans to your needs.