Writing a will and thinking about what may happen when you are no longer here is a confronting thought for many. Perhaps that’s why around 50% of Australians do not have a current valid will.
In reality, estate planning – writing your will, and other life-planning documents such as Power of Attorney can give you peace of mind and a sense of security. Good estate planning can lessen the stress on your loved ones when you pass, by reducing the decisions they have to make and eliminating possible conflict. By appointing people with specific responsibilities to carry out your final wishes, you can ensure that you and your loved ones are protected and that your finances and property are handled appropriately.
Estate Planning is essentially about thinking about the “who”…
- Who should inherit my estate?
- Who do I trust to make sure that my estate is distributed as I would wish?
- Who do I trust to take care of my dependents, and who do I trust to take care of my finances on their behalf until they reach a certain age?
- Who do I trust to take care of me, my finances or assets, if I am unable? (Via a Power of Attorney document)
These people will form the team that will take care of you and your estate when the time comes. It is essential that you choose well, make sure that they are reliable, responsible and most of all, willing to perform the duties required. It will mean that you will need to have some frank conversations with them before assigning the responsibilities. Remember, more than one person can be appointed to a role. In many cases, this is advisable if one is unable to fulfil their duties or prefers to do it in consultation.
Who should inherit my estate?
Your estate is basically what you own. It could include your home, investments, savings and cheque accounts, car, jewellery, furniture or possessions. You may choose to leave any or all of these assets to…
- Your children or other family or friends
- Business associates
- Charities or important organisations via scholarships, grants or bequests
In Australia, if someone dies without a will in place, their assets are distributed according to the inheritance laws of the state or territory they live in.
Who do I trust to make sure that my estate is distributed as I would wish?
This would be the Executor of your will – it can be more than one person. Upon your death, they will represent you and your estate and ensure that your assets are distributed in the manner set out in your will.
They will do things like close your bank accounts, payout any debts, funeral expenses and identify, preserve and distribute your assets to your beneficiaries.
It is important that the person or people you choose to act as Executor understand their responsibilities and are willing to carry them out. It is also essential to regularly review this position to make sure that they are still capable of the job.
Who do I trust to take care of my dependents, and who do I trust to take care of my finances on their behalf until they reach a certain age?
This is a double-barrelled question! Firstly, who would you trust to take care of your children or any other dependents (including furry ones!) when you are not there? This person would take care of all of the legal, financial and medical decisions for your dependents. When appointing a guardian or guardians, it is crucial that you let them know what is important to you in your dependents’ care – the core values and beliefs you have and the broad parameters of how you would like them to be cared for.
It is a significant responsibility, and you need to be comfortable that they are willing to take it on.
The people you would want to provide the physical and emotional care for your dependents may not be the same person whom you would want to manage your finances. Some people may choose to appoint a different person – someone with financial expertise, who you can be confident will manage your assets until the dependents reach a certain age or stage in their lives.
Who do I trust to take care of me, my finances or assets, if I am unable?
Consider if you were somehow incapacitated, through a health condition or unexpected accident.
Who would you want to make decisions on your legal and financial issues, medical treatment and end of life care?
Once you have decided who you trust for these roles, you need to complete some essential legal documents. These documents vary depending on which state you live in. You should check the requirements in your state or territory before proceeding. Some of the types of documents are as follows:
- An Enduring Power of Attorney.
This is a legal document that lets you appoint someone to make decisions about personal or financial matters.
The power endures – or continues – if and when you are unable to make decisions. It is vital that this is someone you trust, who understands what is important to you and is willing to act on your wishes. This person cannot make medical decisions on your behalf.
- Medical Treatment Decision Maker or Enduring Power of Guardianship
It is important that this person is someone willing to take on the responsibility of your medical or lifestyle decisions if you are incapacitated.
These decisions can impact your life or even death. They should be guided by conversations with you regarding your beliefs and wishes and the information in the Advance Care documents listed below.
They will essentially be acting as you when you can’t make decisions for yourself.
- Advance Care Directive (VIC, NSW, SA and TAS), Advance Health Directive (OLD and WA), Advance Personal Plan (NT) or Health Directive (ACT). This legal document sets out your priorities for your future medical care if you are unable to make decisions. It covers areas such as:
- type/s of treatment you do or don’t want
- what quality of life you are happy with
- whether or not you want to appoint an attorney
- information around any existing health conditions or allergies
- your religious, spiritual or cultural beliefs that might affect your healthcare.
In many states, this document needs to be completed with a Medical Professional.
As you can see, estate planning is about working out who you trust to act for you – either while you are alive and unable to make decisions, or when you have passed on.
Here is a short checklist of things to get into place:
- Make a Will and keep it up to date – Wills should be reviewed every three to four years and take into account changing life situations such as marriage, divorce, gaining children or other dependents, changing health situations.
- Setting up a Binding Death Benefit nomination or Non-lapsing Death Benefit nomination for your superannuation and nominating beneficiaries for any insurance policies.
- Make sure you have any guardianship arrangements in place for the care of your dependents
- Complete any legal documents assigning responsibilities for your medical, legal or financial decisions if you become incapacitated
- Most importantly, have conversations with the people you love and trust to make sure they understand your priorities and wishes. Let them know where your important documents are stored, and the details of the important people you have chosen.
Your preparation now will mean that the path ahead for your loved ones will be made easier during challenging times ahead.
This is a sponsored article produced in partnership with Willed.