Wills & Estate Planning
Wills, Powers of Attorney and enduring guardianships.
Wills & Estate Planning
Planning for what will happen to your assets and yourself both during your lifetime and after your death involves putting into place strategies and appropriate documentation for the management of your affairs in the event you die or are otherwise unable to manage your affairs due to a loss of mental capacity. For example, did you know that not all assets that you own will form part of your estate when you die. The prime examples of this are your superannuation and any interest you have in a family trust. Your planning must include the control and management of such assets, in addition to those which form part of your estate and are subject to your Will. We have outlined below various documents that are relevant to a comprehensive plan and the differing part each one plays in the plan. It is important that you understand the differing role that each document plays as part of the overall plan.
Your Will deals with what happens to your assets after you die. It is important that you update your will as your personal circumstances and assets change. This is of particular importance as you age or if you get married, separated or divorced or start living with someone in a dependant or de-facto relationship. For example marriage will invalidate a previous will for the parties who have married unless the will is made in contemplation of the marriage. A will that may be appropriate for a couple with minor children will not be suitable for a couple with children over 18 from separate relationships. The will needs to be tailored to the specific needs of the persons involved. Given the increasing prevalence of the so called “blended family” there are options such as contracts to make mutual wills and the use of testamentary trusts to ensure that the children or families of both parties to a relationship are protected.
If you die intestate (ie. without a valid will) your assets will be dealt with according to the rules of intestacy. This means your assets will be distributed according to legislation, not as you would wish. It also makes dealing with your assets much more difficult and expensive for those you leave behind. It is therefore vital that you have a valid and professionally drafted will to ensure your assets are distributed according to your wishes and to ensure that no partial intestacy is created by an incorrectly drafted or executed will.
Powers of Attorney
A Power of Attorney is a document whereby you can appoint someone (your “Attorney”) to manage your financial affairs or sign documents on your behalf in the event you are unable to do so whether by mental incapacity or absence (for example if you go on a trip overseas). Please note that this document ceases to have effect if you die. Once you die the provisions of your will govern how your assets are to be dealt with.
An Enduring power of attorney is one which continues to operate even if the person appointing the attorney losses mental capacity to make decisions for themselves. In NSW a power of attorney can be made “enduring” if a certificate signed by a solicitor or other authorized person is provided certifying that they have explained the effect of the document to the person appointing an attorney and that persons understand that it is to continue even if they lose capacity. It is important that you do not leave it too late before appointing someone as your attorney as you cannot do it once you lose mental capacity to understand the effect of the appointment. If this occurs then in NSW those assisting you will have to make an application to the Guardianship Tribunal to be appointed as your Financial Manager which is a much more involved process than appointing someone as your attorney.
Your Guardian is someone who is authorized to make “lifestyle” decisions on your behalf, eg. Where you live, what health care you receive. It does not authorize them to exercise the powers of your attorney as referred to above. It is important to note that your guardian can only make decisions on your behalf in the event that you lose the ability to make these decisions for yourself. It cannot be used to override your free will if you still have the capacity to make these decisions for yourself.
As for your Power of Attorney it is important that you do not leave it too late before appointing someone as your guardian as you cannot do it once you lose mental capacity to understand the effect of the appointment. If this occurs those assisting you will have to make an application to the Guardianship Tribunal to be appointed as your Guardian which is a much more involved process than appointing someone as your guardian.
Family (Discretionary) Trusts
Beneficiaries of a family trust do not have an interest in the assets of the trust that will pass to the beneficiaries estate upon their death. The real power and control of the trust vests with the Appointor of the trust, ie. the person with the power to appoint or remove the Trustee of the trust who is the person that administers the trust. There may also be specific provision in the Trust Deed as to the passing of the assets of the trust when it ends and the circumstances in which it ends.
If you have an interest in a Family trust it is therefore vital that this interest is considered as part of
the planning process.
In most cases, Life Insurance policies can nominate a beneficiary to which benefits are transferred upon the death of the life insured. This can be a simpler way of transferring ownership than passing assets through an estate.
NIGEL ROSS- NPR LEGAL
Suite 1, 9/19 Mitchell Drive Greenhills, NSW 2323 Australia
Monday - Friday 9am- 5pm
Ph: (02) 4933 1900
Fax: (02) 49331900
NPR Legal is conveniently based in Greenhills on Mitchell Drive opposite the Greenhills shopping Centre.