Ageing Parents: The Conversation Families Should Have Before They Need It
Most families assume they will deal with ageing well.
Mum and Dad will stay independent for as long as possible. The children will agree on what needs to happen. The paperwork will be in order. Everyone will act sensibly. The money will stretch. The decisions will be clear.
Sometimes that happens. Often, life has other ideas.
Our Lorica team recently attended a presentation led by Brian Herd, a recognised elder law specialist with more than 40 years’ experience working with older Australians and their families. His message was simple but confronting: ageing is not just a health issue. It is a family issue, a legal issue, a financial issue and, very often, a decision-making issue.
When planning is done early, families have options.
When planning is left until there is a crisis, families often inherit a mess.
Ageing exposes the weak points
Ageing does not usually create family dynamics. It reveals them.
Old grievances, sibling rivalries, second marriages, unequal contributions, different views about money, and unresolved expectations can all sit quietly in the background for years. Then a parent falls, develops dementia, needs residential aged care, starts a new relationship, or can no longer manage their affairs.
Suddenly, the family system is under pressure.
Brian described ageing as a kind of “battle cauldron” where incapacity, family history, legal complexity and money are all thrown in together. It is not always pretty.
A common example is the adult child who lives nearby and quietly becomes the primary carer. They take the parent to appointments, manage the medications, deal with service providers, organise the home care, handle the paperwork and absorb the emotional load.
Other siblings may live interstate or overseas. They may care deeply, but they are not doing the weekly work. Over time, the local child can feel exhausted and underappreciated. The distant children may feel excluded or suspicious. The parent may feel guilty. Everyone has a version of the truth.
Then, one day, the Will is read.
This is where equal is not always seen as fair, and fair is not always seen as equal.
In one case discussed, a child who had made significant personal and career sacrifices to care for an ageing parent ultimately received a larger share of the estate after challenging the Will. The Court saw this as justified, but it may also have been deeply resented by others.
The better question is not whether one child “deserves more”. The better question is whether the family has had the conversation early enough, clearly enough and with the right advice.
Dementia changes the planning conversation
Dementia is now Australia’s leading cause of death, surpassing cardiac arrest. The statistics are:
Between ages 60-80: 1 in 20 chance of contracting dementia
Between ages 80-85: 1 in 4 chance
Over age 85: 1 in 2 chance
Dementia is one of the most important practical risks in family financial planning.
The issue is not only diagnosis. It is capacity.
Capacity is the ability to understand a decision, make it freely and communicate it. It is also decision specific. A person may have capacity to decide what they want for lunch, but not have capacity to change their will, sell a property, enter a complex aged care arrangement or restructure family wealth.
This matters because many important decisions in later life require legal capacity, like entering residential aged care or changing control of a family trust or company.
If these decisions are left too late, the person who needs to sign may no longer be able to do so.
That is when families end up in tribunals and courts ask someone else to make decisions for them. Sometimes that is unavoidable. Often, it is the result of delayed planning.
The myth of “next of kin”
One of the most dangerous assumptions in later-life planning is that a spouse or adult child can automatically make financial decisions if something goes wrong.
They usually cannot.
Being a husband, wife, son or daughter does not automatically give someone legal authority to deal with another person’s bank accounts, investments, property, superannuation, companies or trusts.
That is the role of an enduring power of attorney.
Without one, a family may need to apply to a tribunal to have someone appointed to manage financial affairs. If the family disagrees, the tribunal may appoint an independent administrator, such as a public trustee. The public trustee charges for their involvement. Ask anyone who has ever dealt with the public trustee and the feedback is unanimous – it is a nightmare.
Brian described a case involving a matriarch who was the sole director and shareholder of a valuable family company. She insisted on signing cheques herself and had no enduring power of attorney in place. After suffering a stroke, she could no longer make decisions. Her four adult children could not agree on who should take control.
The result was a legal and commercial disaster. A public trustee was appointed, the business was ultimately liquidated, family relationships were permanently damaged, and legal costs were substantial at over $450,000.
The enduring power of attorney could have been prepared well before the crisis.
A poor appointment can be as risky as no appointment
Having documents in place is important. Having the right documents, with the right people appointed, is better.
Brian cautioned against a common structure where different children are appointed for different roles. For example, the accountant child is appointed for financial matters (Enduring Power of Attorney) and the nurse child is appointed for health matters (Enduring Guardian). That can sound sensible.
In practice, it can create disputes about who has authority over a particular decision. Is moving into residential aged care a health decision, a lifestyle decision, a financial decision, or all three? Usually, it is all three.
If the appointed people do not agree, the structure can create more friction rather than less. Brian says the starting point should ideally be having the same people as your Enduring Power of Attorney and Enduring Guardian.
Another issue is whether attorneys should act jointly, severally, or by majority. Requiring unanimous agreement between multiple children may sound protective, but it can create paralysis. Allowing one person to act alone may be efficient, but it may not provide enough oversight.
There is no perfect answer. The structure needs to reflect the family, the assets, the level of trust and the likely decisions that will need to be made.
This is why these documents should not be treated as a simple form-filling exercise.
A spouse and an attorney are not the same thing
Many people appoint their spouse as Enduring Power of Attorney or Enduring Guardian. Often that is appropriate, but the role should still be understood properly.
A spouse acts within a personal relationship. An attorney acts under a legal duty.
Those roles can become confused, particularly in later life, second relationships or blended families. Brian gave an example of a spouse who was also acting under an enduring power of attorney and began redirecting substantial family wealth to a new romantic partner. The adult children had to take legal action to have her removed from the role.
This does not mean spouses should not be appointed. It means the appointment should be made with eyes open and consider questions like:
Who should act if the spouse loses capacity?
Should children be appointed jointly?
Should decisions require majority approval?
Should there be limits, reporting obligations or review mechanisms?
What happens in a blended family?
What happens if the surviving spouse forms a new relationship?
These are not pleasant questions. They are, however, much easier to discuss when everyone is well and calm.
Trusts and companies add another layer
Many families have wealth held through companies, trusts, SMSFs or other structures. This can make capacity planning more complex.
If a person loses capacity, they may no longer be able to act as a company director or trustee in their personal capacity. Their attorney may control their shares or financial affairs, but that does not automatically mean every trust or company decision remains valid.
The rules depend on the structure, the documents and the applicable law.
For families with private companies, family trusts, investment entities or SMSFs, capacity planning should not stop at the personal will and enduring power of attorney. The control documents matter:
Who controls the trustee?
Who can appoint or remove a trustee?
What happens if a director loses capacity?
What happens if an appointor of a trust dies or becomes incapacitated?
Does the company constitution, trust deed, SMSF deed, will and enduring power of attorney work together?
This is where simple estate planning can become complex very quickly.
Aged care decisions are rarely just financial
Aged care is often discussed as a cost problem. It is that, but also much more.
Families are often trying to balance safety, dignity, independence, emotional guilt, inheritance concerns and affordability. These decisions are difficult because there is rarely a perfect answer.
Some people strongly prefer to remain at home. With enough support, that may be possible. But high levels of in-home care can become extremely expensive. Brian discussed an example where 24-hour in-home care required three eight-hour shifts per day and cost around $7,000 per week.
For some families, that may be affordable. For many, it is not sustainable for an unknown period. It may also create tension if adult children see the estate being rapidly depleted.
This is not a reason to deny care. It is a reason to plan properly.
The priority for determining where an ageing parent should live is safety – this should always come first. Preferences matter but they cannot override physical risk, especially where dementia, falls, medication management or wandering are involved.
What families should do now
The best time to plan for ageing is before anyone thinks it is urgent.
That means while parents still have capacity, while relationships are calm, and before decisions are being made from a hospital corridor.
At a minimum, families should consider the following:
1. Are the wills current?
Do they reflect the current family structure, asset position and intentions? Do they consider second relationships, vulnerable beneficiaries, blended families, estranged children (if you don’t make some sort of allowance for them, often $100,000, expect the Will to be challenged in NSW), unequal contributions or family business interests?
2. Are enduring powers of attorney in place?
Are the right people appointed? Can they act practically? Is there a backup? Are the documents current and accepted by relevant institutions?
3. Is there an enduring guardianship or equivalent health decision-making document?
Who can make lifestyle, accommodation and medical decisions if capacity is lost?
4. Do the estate planning documents align with trusts, companies and superannuation?
Wills do not automatically control everything. Superannuation, family trusts, companies and jointly held assets may pass or be controlled outside the will.
5. Have aged care preferences been discussed?
Does the person want to stay at home? Under what circumstances would residential care be acceptable? What level of cost is reasonable? Who will help make the decision?
6. Has the family had the uncomfortable conversation?
Not every detail needs to be shared with everyone. But silence creates assumptions, and assumptions are fertile ground for future conflict.
The role of financial advice
Financial advisers are not lawyers, doctors or aged care placement specialists. But we are often close enough to see when planning gaps are emerging.
We may notice a client becoming confused in meetings. We may see one spouse answering every question while the other withdraws. We may see adult children becoming more involved. We may see family wealth structures that would become difficult to manage if the key decision-maker lost capacity.
That does not mean we diagnose capacity. We do not. It does mean we have a responsibility to raise the issue early, encourage specialist advice and help families understand the financial implications of different decisions.
Good financial planning is not just about investment returns.
It is also about helping families make good decisions before life narrows their options.
Author: Rick Walker
Brian Herd’s book is called Avoiding the Ageing Parent Trap: Essential Information and Solutions