The NSW Trustee & Guardian, which has prepared wills and administered deceased estates for 100 years, is preparing for a restructure which will see all staff told to reapply for their job.
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Leaked documents show ministerial approval has been given for the restructure, with a human resources plan prepared to manage staff reactions.
A "change management" consultant will be appointed with staff offered counselling as part of the plan, which is awaiting cabinet approval.
The government agency administers the financial affairs of more than 10,000 people with cognitive disability. Last year, it added 1626 new estates worth $602 billion and 1612 new trusts worth $62 billion.
As the population ages, and rates of dementia increase, a growing number of people are reliant on the Trustee & Guardian for power of attorney, guardianship and estate management.
But documents leaked to the NSW Opposition say the Trustee & Guardian's business model is "financially unsustainable" in the face of an ageing population and a significant operating loss is forecast for 2016/17. No alternative funding source has been identified.
The new agency will encourage NSW residents to select a private financial manager and to pre-prepare their wills.
Shadow attorney-general Paul Lynch said: "This Government has never seen a public sector agency it doesn't want to decimate. It's driven by cost cutting and slashing. It ignores the appalling affect this has on the delivery of Government services.
"That's particularly serious for the NSW Trustee and Guardian. This agency deals with some of the most vulnerable in our community."
Attorney-General Gabrielle Upton said the government had increased funding for the NSW Trustee and Guardian by 8.4 per cent, to $93.5 million in 2015/16.
"To ensure the future needs of the community are met, NSW Trustee and Guardian is undertaking a comprehensive review of its operations," she said.
Council of the Ageing chief executive Ian Day said the large number of older people coming through presented a cost issue for governments because many Australians aren't making a decision about power of attorney in advance.
"The public trustee has a unique position for people who aren't confident in their alternate decision maker or who don't have much family around them. It is arms-length," he said.
On Friday, the Baird Government privatised the Home Care service, which allowed the elderly and disabled to live independently in their homes, for $100 million to Australian Unity.
