If the newspaper stories about high profile family rifts didn’t get the message across, the personal anecdotes of stress and infighting did. These days, everyone is at least aware of how important it is to have a current Will in place. However, estate planning doesn’t begin and end with a Will.
‘Estate plan’ is a catch-all term that covers every nook and cranny of what happens to your assets after you die. It can include a number of crucial documents, such as:
An updated Will
The Will might not be everything to your estate plan, but it’s a good place to start. It can cover everything from the division of assets, to your wishes for your children, pets, non-financial rights, and more. If there’s a direction you wish to make legally enforceable, chances are your solicitor can either work out how to do it or advise you on how to achieve similar results.
In the past, a person might not have updated their Will very often. But these days, it’s becoming more important to review a Will on a regular basis. Relationship status (de facto relationships, divorce, blended families), parenting arrangements, social norms, personal values and more are all much more variable than they might have been in the past.
If that doesn’t get you thinking about your current Will, the alternative should: dying without a Will. It’s known as ‘dying intestate’, and could result in a court deciding how to divvy up your estate. This is done in accordance with a strict legal formula that may not reflect your wishes, and may result in your hard-earned wealth going to someone you would not have given it to.
Powers of Attorney
Another fact that’s tough to face: according to official stats, more than half of those who live past age 75 will be living with a disability. For many of those people, that disability will severely limit core activities such as working or running a business, getting around, and communicating. You’ve worked hard over many years to craft your lifestyle, from your family home to your hobbies and perhaps your own business. Naturally, you’d want to protect what you’ve built. A power of attorney can cover your work/business, health care, and other personal affairs. The rules and options for powers of attorney vary from state to state in general, there are three types of powers of attorney.
- A general power is made for a specific task and a specific amount of time – for example, if you need someone to manage your affairs while you’re overseas or recovering from a major illness.
- An enduring power allows someone else to make legal decisions if you permanently lose capacity, for example, after permanent brain damage.
- An enduring guardianship or health care directive is a separate type of arrangement covering your wishes for your medical treatment, from resuscitation to residential care.
With many common assets, it’s possible and sometimes necessary to name a beneficiary in advance. These assets include:
- Superannuation: enquire about a binding death benefit nomination (BDBN) in favour of your preferred beneficiaries.
- Life insurance: you can generally name a natural person or a legal person (company/trust) as your beneficiary.
- Business interests: in many cases, your share of a business will pass to the surviving partners, unless other arrangements are put in place for succession planning.
- Assets owned by a trust you control: if you manage a family trust, or a trust for a child in your care, you don’t actually own the assets – the trust does – so they can’t be included in your will. When you’re setting up a trust, make sure that the deed names an appointor – someone who can choose a new trustee if you pass away or can no longer act as trustee.