What are Financial Management Orders?
Published on November 1, 2023 by Diana Farah
Financial stability and security are vital for anyone facing challenges in managing their financial and legal affairs. If another person’s decision-making is impaired due to cognitive impairment, age, mental illness, or injury, in NSW, the legal system provides a mechanism known as Financial Management Orders which can be made to assist individuals who may struggle to manage their financial and legal affairs. This article explains Financial Management Orders, their significance, and why seeking such orders may be necessary for specific, needy individuals.
Understanding Financial Management Orders
Financial Management Orders are designed to support someone unable to effectively manage their finances due to mental illness, injury, cognitive impairment, age, or other incapacities. These orders are governed by the NSW Trustee and Guardian Act 2009 (NSW) and aim to protect the financial interests of vulnerable individuals by appointing a trusted person or entity to act as their financial manager.
The Supreme Court (Equity Division – Protective), NSW Civil and Administrative Tribunal (NCAT) Guardian Division, or Mental Health Review Tribunal can make a Financial Management Order.
What does a financial manager do?
A financial manager is responsible for looking after all or part of another person’s financial and legal affairs. It can include things like managing their money, shares, real estate, superannuation, any business interests, motor vehicle, and any debts they have.
Who can be appointed a financial manager?
- Private financial manager – a family member, friend, or Trustee company (more than one person can be appointed to make decisions together) can be appointed; or
- The NSW Trustee & Guardian – if no family or friend is willing or able to undertake the role of a private financial manager, then the NSW Trustee & Guardian can be appointed to manage part or all of another person’s financial and legal affairs.
When are Financial Management Orders necessary?
1. Declining mental health or cognitive impairment
Financial Management Orders may become necessary when an individual experiences mental health issues or cognitive impairments that hinder their ability to make sound financial decisions. Such conditions may include dementia, intellectual disability, or severe mental illness, which may impair a person’s judgment and decision-making capabilities.
2. Financial exploitation
Financial Management Orders can protect against financial abuse or exploitation. Elderly individuals, for example, may be vulnerable to scams, fraudulent schemes, or undue influence by people with bad intentions. In such cases, a Financial Management Order can prevent any financial harm.
3. Personal safety and well-being
When an individual’s safety and well-being are at risk due to their inability to manage their finances effectively, a Financial Management Order can provide the necessary support. This could include ensuring bills are paid on time, maintaining suitable living conditions, or ensuring access to appropriate healthcare services.
What are the benefits of seeking Financial Management Orders?
- Financial protection – Financial Management Orders establish a legal framework that safeguards an individual’s assets and income, ensuring they are managed in their best interests. This protection can prevent financial mismanagement or exploitation.
- Peace of mind – for the individual and their family, knowing that their financial affairs are being handled can bring peace of mind. Financial Management Orders provide a structured and regulated system to ensure financial matters are handled responsibly, allowing individuals to focus on their well-being and, in certain circumstances, their recovery.
How do I obtain Financial Management Orders?
To obtain a Financial Management Order, an application needs to be made to the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT). The application should include relevant medical reports, evidence of incapacity, and details of the proposed financial manager.
NCAT will review the application, consider the individual circumstances, and decide based on the best interests of the person in need. You can contact us at Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page if you need help regarding the appointment of Financial Management Orders, and one of our lawyers will assist you.