Importance of Estate Planning

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This online tool will ask you a series of questions about your personal circumstances so you can receive instant and personalised information. Help our lawyers understand your unique situation so they can make a head start on your estate planning, saving you time and money.

As well as assisting our clients with their current legal needs, we also enjoy assisting them with future planning.  One area of key importance is making sure our clients are aware of the legal rules and processes relating to what happens to their assets after they pass away.

I have a question about:

  • What is Estate Planning and Why is it Important?

    Sometimes there can be unexpected consequences where no Will is in place, or where assets are held in companies or trust structures rather than within the estate of a person. It is always advisable that clients plan this area carefully.

    Just what is comprised in your nest egg may determine how you ensure your aims are achieved. It could be personal property (shares, land and money), property in a trust in which you are perhaps one of or the main beneficiaries, benefits held in superannuation, or entitlements flowing from insurance, retirement benefits or court actions.

    A critical question to ask about each of these assets is whether they are protected from former spouses, former or current spouses of your children, creditors (both yours and your children’s), or the trustee in bankruptcy for you or your family members.  This question is not only relevant in current circumstances, but also just as importantly should circumstances change in the future – especially in the context of a relationship breakdown or financial hardship.

    Whilst you are alive, removal of assets from personal ownership (after a certain period of time called a claw-back period) is generally effective to prevent creditors or a trustee in bankruptcy (who is the ultimate end of the line when creditors come calling) from taking them. However this is not always the case – even property held by a family member or trust may be at risk if the “protected” person controls it or made the financial contribution for its acquisition.

    Part of estate planning may involve having honest discussions, which we can facilitate, with family members so that everyone understands what arrangements are in place and to ensure that all of the relevant issues are taken into account.

    There is no one way of protecting your nest egg.  Your situation is unique, and strategies will need to be tailored to you.  We enjoy working collaboratively with accountants and financial planners to achieve the best outcomes for our clients.

    We have skilled Estate Planners who will assist you with all of your needs including:

    • Wills, Codicils and Testamentary Trusts
    • Self Managed Super Funds and Personal Insurances
    • Guardianship and Powers of Attorney
    • Review of Trusts
    • Working with your Accountant and/or Financial Planner
    • Considering the risk of claims against your estate, and how to minimise the risk.
  • Why Do I Need to Make a Will?

    Perhaps the best answer is to consider the following questions:-

    • Do you want your money used to pay lawyers to sort out your affairs after you are gone?
    • Do you want your assets and hard earned cash (your Estate) to go to people determined by law and not of your choice?
    • Do you want someone else to decide who gets your Estate?

    If you have answered “no” to these questions, then you probably need a Will.  Although there is legislation in place in most states in Australia to cover what happens if you do not make a Will (lawyers call it dying “intestate”) and that determines who gets what and how much of it – those particular formulas may not be what you want.  If you have any slight “complications” in your life, such as

      • having both a wife and a mistress, or
      • two girlfriends/boyfriends,
      • children from more than one relationship

    then the division between them might surprise you.  Not that you would be around to see it!

    There are also complications with making Wills using “Do It Yourself kits” (DIY kits).  They may seem cheaper and easier but Will drafting is somewhat of an art.  Using a DIY kit without understanding the formal requirements for ensuring that a Will is valid and properly deals with all of the complications and aspects of your Estate (such as those “girlfriends” or forgetting about certain assets) can make the whole Will invalid.  Then you are back to square one – you will have died intestate.

    Lawyers can ensure that you have addressed all of the necessary issues when making a Will:-

    • Considering who should be executor, and advising on just what that role entails. For example, it is not much good appointing an executor who may well be elderly and not capable when the time comes.
    • Ensuring that the whole of your Estate has been appropriately dealt with. That will involve checking just what you own in your own name, and not through trusts, companies or jointly. Jointly held assets will generally pass to the other co-owner.
    • Ensuring that all of the necessary people the Courts and the law think you should consider (your children, your spouse, your girlfriends, your boyfriends or any other family members and partners) have been at least considered – and whether or not you choose to make a gift at least you will receive advice on the consequences of doing so or not doing so.
    • Advising you on the benefits of giving a gift outright, or having it held in trust (such as for an incapable or minor beneficiary).
    • Advising you on some of the tax consequences of the ways in which you make a gift under your Will.
    • Advising you on dealing with superannuation which does not automatically form part of your Estate.
    • Understanding what “disinheriting” someone might mean for your Estate – not the least which might be lengthy litigation and a negative impact on the value of your assets.
    • Making sure you sign it properly with the correct witnesses so it can’t be challenged.
  • Wills

    If you die without a valid Will your estate will be distributed as fixed by law.  The distribution is likely to be very different from what you would want.  It also leads to uncertainty and concerns for those family members who survive you.

    A Will can be a simple document providing for the direct gift of assets on death to the beneficiaries named, or it can be a much more complex or sophisticated document creating testamentary trusts providing for greater flexibility and consequent tax savings, and protection of assets to ensure they pass to your chosen beneficiaries in circumstances where otherwise they might be at risk.

    A Will only deals with assets that are owned by the Will maker personally.

    There are other assets that will be dealt with separately from those dealt with by a Will.  These other assets might include jointly held property, superannuation, life insurance, trusts and partnership interests.

    It is also important to understand that owning a share or shares in a family company will mean that what is dealt with by a Will are the shares in the company, rather than the individual assets of the company.

  • What is a Power of Attorney and Why Should You Make One?

    A Power of Attorney is a document which appoints a person as your attorney to deal with your legal and financial matters whilst you are alive. The right of the attorney to act on your behalf terminates on your death (except in the somewhat unusual case of an “irrevocable” Power of Attorney, which is generally only created in fairly specific circumstances and not the topic of this article). A Power of Attorney is particularly useful if you are an extremely busy person, travel interstate or overseas frequently and of course an important fall-back if you fall sick or no longer have capacity.

    A Power of Attorney can be general or enduring, and should be tailored accordingly to meet your specific needs. A General Power of Attorney is only effective in authorising the attorney to act in matters whilst you have capacity and is generally used in business matters or if there is some reason for not wishing the attorney to continue to act after you lose capacity. So, should you lose capacity, and are no longer compos mentis, your Power of Attorney will not be effective unless it is an Enduring Power of Attorney. That is a power specifically intended to go on (endure) after you lose capacity and its execution must be witnessed by a prescribed witness (which includes a solicitor, magistrate and some other specific persons). Each of your attorneys needs to accept their appointment by signing the document and their appointment will not commence until they have done so.

    The choice of who should be your attorney is a personal one, but we do suggest that it should be someone worthy of your trust as they will be able to deal with all of your legal and financial matters on your behalf. If you choose more than one attorney, they can be appointed to act jointly (all decisions must be made together) or jointly and severally (decisions can be made together or each attorney can act individually of the other e.g. in the case that one attorney is unwell or overseas at the time).

    A Power of Attorney can also provide for special conditions and limitations on your attorney’s powers, can provide that your attorney may confer specific benefits on the attorney or some other person and can allow the attorney to make certain gifts on your behalf.  A power of attorney does not deal with matters relating to your health and lifestyle (see Appointment of Enduring Guardian).

  • Appointment of Enduring Guardians

    Unfortunately the vagaries of human life mean that sometimes we are not capable of making decisions about our own care. This could be due to a number of causes, including dementia, serious illness or accident. In such times it is vital that you have a trusted person empowered to make decisions on your behalf. In order for that person to do so, and for their decisions to be followed, it is important that you appoint them as your Enduring Guardian.

    An Appointment of Enduring Guardian is a legal document which grants your guardian the right to make various health and lifestyle decisions on your behalf. The document is only effective when you are incapable of making the decisions for yourself.

    Some of the decisions that your guardian may make include where you live and what medical and dental treatment you receive. You are also able to restrict the nature or extent of the guardian’s powers, if, for example, you do not wish to be placed into a nursing home.

    Importantly, you are also able to include directions regarding what treatment you are to receive if the worst should happen and you are unlikely to ever regain the capacity to make your own decisions. In some circumstances this may include that you are only to receive pain relief, but that any other life sustaining medical treatment is ceased. This is further discussed below, under Advanced Health Care Directives.

    One other advantage of appointing an Enduring Guardian is that it gives you the opportunity to discuss these matters with your loved ones, so that both you and they can be sure of your wishes, in the event that they have to make a decision on your behalf.

    It is important to note that, while your guardian will be entitled to make health and lifestyle decisions, they will not also be able to make financial decisions for you (potentially meaning that they will be incapable of paying for your care). To do so you would also need to grant a Power of Attorney, discussed further here.

  • What is an Advanced Health Care Directive?

    Advanced Health Care Directives (Directives) are also known as Living Wills. A Directive is a document that describes your future preferences for medical treatment in anticipation of a time when you are unable to express those preferences because of illness or injury.  Completion of a Directive should ideally be one component of the Estate Planning process.

    A Directive provides family members, friends, enduring guardians and medical professionals with a statement of your intentions and preferences regarding your medical treatment.

    It is important to note that Advanced Health Care Directives have no legislative base in New South Wales. Nevertheless most healthcare professionals will act on your directive in conjunction with consultation with family members and/or your guardian.

  • When Should I make a Directive?

    This choice is entirely up to you and will depend upon your circumstances at the time. People often choose to create a Directive when they have been diagnosed with a terminal illness and have fairly specific advice from medical professionals as to the progress of the illness.

    However there is nothing to prevent young healthy adults from choosing to make a Directive setting out their wishes for their future medical care as part of the estate planning process. In this respect it is important to ensure that the Directive does not conflict with your Appointment of Enduring Guardian. You should therefore involve your guardians when you are making your Directive so that they are aware of your wishes.

  • What would I include in the Directive?

    You can include whatever you wish in a Directive such as

    • statements in which you consent to treatment or refuse consent to certain treatments are commonly included,
    • you may have specific moral or religious considerations that you wish to record,
    • you may wish to appoint a decision maker who should be consulted when deciding upon medical treatment – this is likely to be the guardian appointed under your Appointment of Enduring Guardian

Protecting your reputation starts with simplifying the complex. This handy checklist should quickly point you in the right direction and help you understand whether you have a case, and where to start to secure the best possible outocme.