By The Chipkie Team, Personal Finance Editorial Team · Last updated 25 October 2026
Being trusted to manage a relative’s finances does not mean every family money request is yours to approve. A family loan decision under a power of attorney needs an authority check before the transfer, particularly if you or someone close to you would benefit.
This guide focuses on NSW and helps you prepare for independent legal advice. It is not permission to execute a transaction. A signed family loan agreement cannot cure a lack of authority under the appointment or the applicable law.
Key Takeaways
- Read the actual appointment, including its commencement provisions, limits and conditions.
- A request benefiting the attorney or their family raises conflict questions that need independent review.
- Changing or forgiving an existing debt also needs an authority check.
- NSW rules should not be assumed to apply uniformly across Australia.
What authority does the NSW appointment give you?
Start with the actual power of attorney document and ask whether it is operating and authorises the proposed decision. NSW guidance requires attorneys to follow limits and conditions and act in the principal’s interests. A family relationship, broad financial access or a borrower’s signature is not a substitute for that authority check.
The NSW Trustee and Guardian guidance distinguishes general and enduring appointments. It also separates financial decisions from an enduring guardian’s personal and health-related role. Check the documents rather than assuming one appointment covers every aspect of a relative’s life.
| Role or document | Question to ask before a loan decision |
|---|---|
| Principal | Who owns the money, what are their wishes, and who is legally able to make this particular decision now? Do not infer incapacity from age. |
| Attorney | What appointment authorises financial decisions, when does it operate, and what limits, joint-decision requirements or conditions are written into it? |
| Guardian | Is the appointment about personal or health decisions rather than this financial transaction? Obtain advice if the roles overlap in the proposed arrangement. |
| Executor | Has the principal died, requiring the estate process instead? Do not continue acting under a power of attorney after death. |
The official National Guide on Financial Enduring Power of Attorney warns that each state and territory has different laws. A national guide is a starting point for local advice, rather than evidence of one uniform Australian rule.
What changes if you or your family would benefit?
A proposed loan benefiting you or a connected family member needs careful independent review before any money moves. Being able to operate the principal’s bank account does not answer the conflict question. Explain the proposed benefit and your role openly, and ask a solicitor what authority, safeguards or further process is required.
NSW guidance identifies conflicts, accurate records and keeping finances separate as key responsibilities. Do not rely on a general family consensus or a plan to repay quickly. Good intentions and an interest-free rate do not establish permission.
- Describe every beneficiary: identify the borrower, anyone receiving funds directly and any person whose expenses or existing debt would be paid.
- Explain your connection: disclose your own involvement, your household’s benefit and relevant family relationships to the independent adviser.
- Describe the principal’s position: prepare current living costs, foreseeable care needs, existing commitments and accessible savings for discussion.
- Bring the real documents: provide the appointment, proposed terms, prior family arrangements and any relevant instructions, rather than a summary alone.
- Ask who should decide: obtain advice about whether you can act and what independent decision or approval process may be necessary.
In a hypothetical request, an attorney’s daughter wants to borrow $8,000 from the principal for a car. The question is not just whether she can repay $200 monthly. The attorney must first resolve whether they can make that decision at all and how the conflict is handled.
Can you change or forgive an existing family loan?
Changing repayment dates, reducing interest or forgiving principal is also a financial decision requiring an authority and conflict review. An existing loan does not give an attorney unlimited power to alter it. Preserve the original records and seek advice before signing a variation, releasing security or treating a family debt as cancelled.
For example, a hypothetical loan began at $20,000 and verified principal repayments total $5,000. The starting principal balance is $15,000. A relative’s request to “call it settled” is a proposed change to that position, not evidence that another $15,000 was repaid.
| Decision record | What to prepare for review |
|---|---|
| Existing obligation | Original agreement, actual advances, repayments, balance reconciliation and relevant security documents. Separate agreed facts from disputed terms. |
| Proposed change | The exact request, who benefits, why it is being made now and what would remain owing if it proceeded. |
| Authority question | The relevant appointment provisions, commencement evidence and advice on any limits, conflicts or additional process. |
| Principal’s circumstances | Relevant wishes, financial needs and information the independent adviser requests. Keep the principal’s money and records separate from your own. |
| Outcome and evidence | Actual advice or decision, its date and any valid resulting documents. Do not write that approval was obtained while it remains unresolved. |
Our family loan and aged care guide provides wider planning context. The authority question still comes first when someone else is handling the lender’s finances.
Does an enduring appointment continue after death?
No. NSW guidance says a power of attorney is only valid during the principal’s lifetime. After death, do not keep making financial decisions under that appointment. The estate must be handled through the appropriate process, and the executor’s role is separate from the authority an attorney previously held.
Can a signed loan agreement fix missing authority?
No. A borrower’s agreement to repay does not establish that the person advancing the money had authority to do so. Check the appointment and obtain independent advice first. A recording tool can document appropriate terms once authority is resolved, but it cannot grant powers or approve a conflicted decision.
Is a family meeting enough to approve the loan?
A family meeting can clarify wishes and facts, but it is not a substitute for the actual appointment or legal requirements. Avoid assuming everyone agreeing resolves a conflict. Give the independent adviser an accurate account of the proposal, who benefits and any pressure, disagreement or uncertainty about decision-making authority.
What should you do before moving the money?
Pause the transfer, collect the appointment and existing records, and ask an independent NSW solicitor about authority and conflicts. Record the actual outcome before taking the next step. If the principal has died, follow the estate process instead; our guide to a family loan in a will explains that separate planning context.
Once authority and suitability are independently confirmed, you can record the appropriate family loan terms with Chipkie alongside the legal advice and decision record.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or tax advice. Australian laws and lending criteria vary by state and territory and may change. Always consult a licensed financial adviser, solicitor, or conveyancer before entering into any financial arrangement or property purchase with another party.
