Below is Chapter 5 of our ‘What to do when someone dies’ booklet. To read the other chapters of our booklet, click the links below:
- Chapter 1 – What to do within hours
- Chapter 2 – What to do within days
- Chapter 3 – What to do within weeks
- Chapter 4 – What to do within months
Planning for the future
Why you need to think about estate planning
Take a few minutes out to ask yourself the following important questions:
- Do you want to choose who benefits from your wealth, and when?
- Do you want to protect the wealth you give your children from unjust claims?
- Do you want to make sure your children only receive wealth as and when they are mature enough to handle it constructively?
- Do you want to ensure your family’s wealth remains available to support your children, even if your spouse re-partners?
- Do you want to minimise taxes on the assets that you leave your partner and children?
- Do you want to smoothly pass control of your business and investment structures to the next generation (such as superannuation, family trusts and private companies)?
- Do you want to minimise the costs of administering your wealth when you die?
Estate Planning is the process of ensuring that:
- You have a clear understanding of the legal structures through which you hold and control your wealth;
- You have appropriate strategies in place to ensure your wealth is there to support your family when you die;
- Your children are adequately provided and cared for by people they know and trust; and
- There is a smooth transition of control over your legal structures.
We follow a simple and logical process:
- First, we identify your objectives (through our comprehensive ‘Fact Find’);
- Then we provide you with clear recommendations as to how to achieve your objectives, together with a fixed quote of what we will charge;
- Next, we promptly implement our recommendations; and
- Finally, we keep in touch and offer a periodic review.
Your Will
Your Will is your most important estate planning document, as it dictates who receives the benefit of your wealth when you die.
The level of complexity of your Will depends in part on the size and nature of your personal asset pool and in part on the people whom you want to benefit from your wealth (or specifically exclude from benefitting, as the case may be).
It is important to get tailored advice about your estate planning needs to minimise dissipation of your wealth as a result of tax and estate administration expenses. Investing in quality estate planning documents now will usually save a lot of money in the future.
Testamentary Trusts
Most people by now have heard of ‘family trusts’. They can be an effective way to protect assets, divide income, provide flexibility and reduce tax liabilities.
You can also set up what is known as a ‘testamentary trust’ through your Will. This is like a family trust, but it only comes into existence on your death. You can even set up separate trusts for each of your beneficiaries.
There are a number of benefits that testamentary trusts can offer, including:
- Wealth protection;
- Keeping your assets within your family line;
- Giving assets to your children over time;
- Income flexibility;
- Tax minimisation (including capital gains tax and stamp duty benefits); and
- Reduced likelihood of claims against your estate.
We can help. Call us on 1300 654 590 or email us to discuss how.
General and Enduring Power of Attorney
A Power of Attorney is a legal document which appoints one person (the ‘Attorney’) to act on your behalf (as ‘Donor’) in respect of your property and financial affairs. An ‘Attorney’ in this sense does not necessarily mean your lawyer. The Attorney is usually a family member or close friend.
A Power of Attorney does not enable your Attorney to make medical or lifestyle decisions on your behalf. The person to make these decisions is your Enduring Guardian, Substitute Decision-Maker or Medical Power of Attorney (appointed in a separate document, discussed below).
You can make either a general ‘Power of Attorney’ or an ‘Enduring Power of Attorney’. The difference is that a general Power of Attorney ceases to have effect when you lose mental capacity, but an Enduring Power of Attorney continues in force after that time. Anyone can develop conditions like dementia or Alzheimer’s, or suffer a stroke or be injured in a car accident, so that they are unable to manage their financial affairs. Making an Enduring Power of Attorney is a practical step you can take while you still have mental capacity. It means that essential financial matters will be attended to by someone you choose on your behalf.
Any adult can appoint a Power of Attorney. If a person has a mild intellectual disability or is in the early stages of dementia, they may still be able to make a Power of Attorney. This will depend on their understanding of the nature and effect of the document. If their capacity is in doubt, then an assessment of the person’s understanding should be made by a medical practitioner.
As long as you retain mental capacity you retain full authority to deal with your property and money, even if a Power of Attorney is in place. Also, you can state in the Power of Attorney that it is not to come into effect unless you become of unsound mind or are incapable of making your own decisions. Your Attorney can be required to obtain a doctor’s certificate which says this.
You can only appoint a Power of Attorney while you are of sound mind. It is too late if you become of unsound mind. If you become of unsound mind and have not made an Enduring Power of Attorney then you lose the ability to appoint someone to manage your property and finances. Someone will need to apply to the Guardianship Tribunal, Administrative Affairs Tribunal or the Supreme Court of the relevant state to have a manager appointed. This means a government official could be making decisions on your behalf, and regular fees are charged for this service. Having a caring friend or relative acting as your Attorney is usually a much cheaper and better alternative.
Your Attorney will be able to do anything you legally could do. Therefore, you need to choose a person who is trustworthy and responsible enough to manage your property and finances. Before you appoint someone you should be sure the he or she will in fact do all the things that you want. Your Attorney is legally bound to carry out the written instructions in the document. You can appoint more than one Attorney, and this is often a good idea. You should choose people who are able to coordinate well with each other. You will need to decide whether you want your Attorneys to act jointly (together) or severally (individually). The benefit of having two Attorneys acting jointly is that there is less chance of both Attorneys acting contrary to your interests.
Any Power of Attorney automatically ceases to operate if your Attorney notifies you that he or she will no longer act under the power, or when you notify your Attorney that the power has ceased. It also ceases if you become bankrupt or die.
You can cancel your Power of Attorney at any time, as long as you are of sound mind. You must make sure that your Attorney knows that you are cancelling the Power of Attorney.
We can help. Call us on 1300 654 590 or email us to discuss how.
Enduring Guardianship/Advance Care Directive
An appointment of a Guardian (or ‘Substitute Decision-Maker’ (SA) or ‘Medical Treatment Decision Maker’ (Vic) under an Advance Care Directive) is a legal document in which you appoint a person to make personal or lifestyle decisions (in particular, health and care decisions) on your behalf when you are not capable of doing this yourself. Obviously you will prefer to make decisions for yourself. However, sometimes it is not possible for us to make these decisions. We can become sick, be injured in an accident, suffer a stroke or have a condition which makes it impossible for us to make informed decisions on our own behalf.
Usually the types of decisions your Guardian may need to make on your behalf relate to where you will live (for example, in a nursing home), what health care you will receive, who will be your treating doctor, and what other personal services you may receive (for example, home nursing support). Certain medical treatments can only be approved by the relevant government board or tribunal and your Guardian cannot override your wishes in refusing medical treatment (without the approval of such board or tribunal).
Many people think that if they are ill or injured, then the appointment of a Guardian can take place at that time. Unfortunately, that is not always possible. If you have already lost the capacity to make decisions about your own welfare and medical treatment, you have also lost the legal capacity to make a decision to appoint a Guardian.
If you do not appoint a Guardian (or ‘Substitute Decision-Maker’ (SA) or ‘Medical Treatment Decision Maker’ (Vic) under an Advance Care Directive) then if the circumstances arise where one is needed it could be necessary for someone to make application to the relevant government authority to be appointed your Guardian. Such authority might agree to this appointment or alternatively, might appoint the Public Advocate (a Government Official) to act as your Guardian. An application to the government authority is more complicated and potentially more costly for you than making your own appointment now. And if a Public Advocate is appointed they will charge a fee for administering your affairs.
The person you appoint must be over 18 years of age. They should be someone who you trust and someone who will have an interest in making decisions in your best interest. Your Guardian cannot be a person providing treatment or care to you at the time of the appointment.
A Guardian cannot make a Will for you, vote on your behalf, consent to marriage, manage your finances, transfer your property, or override your objections to medical treatment.
We can provide you with the document that you need to validly appoint a Guardian / Substitute Decision-Maker / Medical Treatment Decision Maker. Certain specific information must be contained within the document for it to be valid. Additional instructions can be inserted – for example, you can choose what decisions you want your Guardian to make, and give directions to your Guardian as to how you wish them to perform the functions they are entitled to do under the appointment.
The appointment of a Guardian only takes effect when you are unable to make your own personal or lifestyle decisions. It will be up to your Guardian to consult with a medical practitioner about your capacity to make decisions before taking any steps on your behalf.
At the appropriate time your Guardian would approach your doctor for a certificate to the effect that you are totally or partially incapable of making your own decisions. The certificate, along with a copy of the appointment, would provide evidence to others of the fact that a Guardian is then entitled to make decisions on your behalf.
The appointment continues until you die or the appointment is revoked.
We can help. Call us on 1300 654 590 or email us to discuss how.
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The information contained in this post is current at the date of editing – 20 March 2024.
