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Estate Planning means planning to deal with your affairs and estate if you are unable to do so yourself for any reason including death. This brief overview will allow you to understand why it is important for you to consider what would happen if you died or were unable to manage your affairs. Let’s start with the basics.
Wills
A Will is an important estate-planning tool to ensure that your estate assets are distributed to the people and organisations of your choice. It must be updated to include any changes in your personal and financial situation, such as new members in the family and new assets to be bequeathed.
It is wise for you to have more than one executor for your will, as this will cater for the situation where one executor may be unable or unwilling to take on the responsibility.
Be aware that your instructions to dispose of assets through a Will could be challenged through the courts by any of your potential beneficiaries. You should speak with a legal adviser about this, as there are ways to ensure that your wishes are actually met. For example, a current binding death nomination on your superannuation cannot be varied by anyone.
Power of Attorney
A power of attorney is a formal document by which one person, the donor, appoints another person, the
attorney, to act on his or her behalf. For example they could bid on a house for you or pay bills for you whilst you are on holiday. You can limit the extent of the power of attorney in any way you require and it can be cancelled at any time.
It should be noted that a power of attorney remains in force until, cancelled, expired, or if you become incapable of performing the activities covered in the power of attorney.
An enduring power of attorney ensures that the authority given by the donor to the attorney continues
beyond the donor's own capacity. This allows the attorney to continue to act notwithstanding that the
donor has lost his or her mental capacity. It is common to have reciprocal powers of attorney, that is, to nominate one person as attorney for the other.
Enduring Guardian
An enduring power of attorney can make decisions relating to your money and property if you lose the
capacity to do this for yourself. It does not provide legal authority to make personal or lifestyle decisions on your behalf. To do this, you need to appoint an enduring guardian (you can appoint more than one guardian if you wish) and you can also choose what decisions your guardian can make for you (called functions).
An Enduring Power of Guardianship allows you to appoint someone to make decisions about your personal interests if you lose your mental capacity. For example; where you live, whether you need to go to a nursing home, which doctor you should see, or whether to agree to medical treatment suggested by a doctor.
Binding Nomination
A binding nomination allows a member of a superannuation fund to exercise their discretion to
determine who should receive their superannuation benefits in the event of their death. The Trustee is bound by the member’s nomination, subject to validity requirements. Binding nominations must be renewed every three years to remain valid.
Anticipatory Direction
An Anticipatory Direction allows you to make binding decisions about your medical treatment if you are in the final stages of a terminal illness, or if you are in a persistent vegetative state and are therefore unable to communicate your wishes regarding medical treatment.
One of the issues which you may wish to consider is whether you want to be revived, or artificially kept alive, even if there is only a very slight chance of recovery.
Medical Power of Attorney
A Medical Power of Attorney allows you to appoint a ‘Medical Agent’ to make decisions on your behalf about your medical treatment.
The benefit of making a Anticipatory Direction and also appointing a Medical Agent is that the Medical Agent can make decisions regarding your medical treatment in circumstances which you may not have foreseen in your Anticipatory Direction. Your Anticipatory Direction will only apply if you are terminally ill or in a persistent vegetative state. A Medical Power of Attorney covers the broader range of medical conditions in which you are unable to make decision for yourself.
Testamentary Trust
A testamentary trust is a discretionary trust that is created under a Will at the time of a person’s death. The primary purpose of a testamentary trust is to manage estate assets to produce income for beneficiaries.
There are enormous benefits in providing for your family through a testamentary trust.
Passing Assets Outside of Your Estate
Upon your death, assets do not necessarily need to be passed through your estate. Alternate methods of asset transferral outlined below should be discussed with your solicitor prior to the preparation of your will as these may not need to be included should you wish them to pass outside of the Estate.
Ownership
When assets are owned as joint tenants, the asset will pass immediately to the remaining holder(s) should another holder die. This can be a simpler way of transferring ownership than passing assets through an estate.
Death Nominations
In most cases, Life Insurance policies and Superannuation Funds can nominate a beneficiary to
which benefits are transferred upon the death of the life insured or fund owner. Again, this can be a simpler way of transferring ownership than passing assets through an estate.
Nominations can be both binding and non-binding. Should you decide to nominate beneficiaries in this way, it is recommended at that you make binding nominations to ensure the nomination is unable to be
altered under any circumstances.
Non Estate Assets
Many assets such as superannuation, life insurance and assets held by trusts or companies are not ‘your’ assets. Specific arrangements must be made to take these assets into account when determining your beneficiaries’ entitlements.
Preparing the Legal Documentation
It is important that you get professional assistance in preparing your will. Thornton Group do not provide professional advice in these areas however we do work in conjunction with legal advisers to ensure appropriate coordination between insurance and estate planning. Most do not charge for the initial consultation and will provide you with a quote to prepare the documentation you require.