Did you know there’s much more to effective Estate Planning than just creating a Will?
Estate Planning involves preparing and executing various tasks that allow for the management of an individual’s financial, legal, and medical affairs in the event of incapacitation or death. While having a Will is an essential part of any Estate Plan, it’s just one piece of the puzzle.
Once your Estate Plan is in place, we recommend reviewing it at least every two to three years. Common reasons to review your Estate Plan include:
- Someone in a key role within your will passes away or is no longer able or willing to fulfill their duties.
- A beneficiary named in your will has passed away.
- You’ve entered into a new relationship or your current relationship has ended.
- You’ve had children, adopted, or fostered children since your last will review.
- Your intentions or financial circumstances have changed.
Here is an overview of key components to be included in an Estate Plan.
General Power of Attorney (“General PoA”)
The PoA is a legal document which allows you (known as the Principal) to appoint another person, entity or trustee (called an attorney) to manage your financial and legal affairs whilst you’re alive. Your attorney can do things like manage your bank accounts or enter into contracts on your behalf. An attorney can act on your behalf whilst you’re overseas on vacation.
The power you give your attorney can be limited in scope (e.g. to only operate certain bank accounts) and effect (e.g. state that the attorney’s power is effective from a certain date or for a certain period).
Enduring Power of Attorney (“Enduring PoA”)
As you might expect, an Enduring PoA is similar to a general PoA, but it has some additional properties. While a general PoA lapses once the Principal loses capacity, the benefit of an Enduring PoA is that it continues to be effective until the time that the Principal passes away.
As with a general PoA, an Enduring PoA can be utilised when you are unavailable due to overseas travel. The Principal of an Enduring PoA can limit the scope of the attorney’s appointment such as nominating that it will only take effect once a doctor has confirmed that the Principal has lost capacity. It may also set such conditions as the medical certificate needing to be reviewed and renewed at regular intervals.
Enduring Guardian (“EG”)
The EG is a legal document which enables you to appoint a person (called a guardian) to make decisions on your behalf regarding your personal, medical and lifestyle choices. The guardian will only be able to act on your behalf once you have lost capacity.
A guardian is normally able to make decisions regarding:
– Medical treatment (e.g. surgery or dental treatment)
– Accommodation (e.g. as whether you need to move into an assisted care facility)
– Personal care services (e.g. haircuts)
Advance Health Directive
An Advance Care Directive is a detailed document which specifically outlines the healthcare treatments you would like or refuse, if you were in a position where you are unable to make or communicate your decisions. The Directive will help your family and doctors know what treatment you want so they don’t have to make those tough decisions for you.
Superannuation & Life Insurance Death Benefits
Superannuation and life insurance death benefits do not normally form part of your estate as they may be paid directly to your nominated beneficiary. If you fail to nominate a beneficiary, your death benefit might be paid in a way you do not desire.
To ensure that this does not happen, you should consider making a valid beneficiary nomination (e.g. by way of a binding or non-binding nomination to your superannuation fund) as part of your Estate Planning.
When determining who to nominate, you will also need to consider the tax implications of your decision. Superannuation death benefits paid to individuals that are non-dependents will be subject to tax. Whereas superannuation death benefit payments made to dependents are not subject to tax.
Business, Company or Self-Managed Superannuation Fund
Are you a business owner or director of a company or have a self-managed superannuation fund? If so, then you should consider how these entities will be managed in the event that you are unable to do so in the future as part of your Estate Planning.
Legal advice is normally required to review lengthy documentation (such as a Company Constitution or Self-Managed Superannuation Fund Trust Deed) to find out what happens in such circumstances. Further legal documentation may be required to ensure that what happens in the future reflects your wishes.
We’re Here to Help
Since none of us can predict when we might lose capacity or pass away, we strongly recommend that everyone over the age of 18 has a comprehensive Estate Plan in place that addresses all of the relevant components mentioned above. This ensures that your affairs and estate are managed according to your wishes.
To discuss your personal Estate Planning needs, contact our team of Will and Estate Planning specialists at 1300 QUINNS (1300 784 667), + 61 2 9223 9166 or submit an online enquiry to schedule an appointment to discuss your personal Estate Planning needs.
