It’s that time of year when people start considering their New Year’s resolutions – and one that should be on everyone’s list is to get their Will and Enduring Power of Attorney done or updated. In fact, you should be getting this done BEFORE Christmas if you can! Wills and Estates Lawyer, Natalie Comerford, discusses why estate planning is so important and the top five reasons everyone should have a Will (and an Enduring Power of Attorney).
Introduction
In today’s economic environment it would be considered risky business if you chose not to insure your valuable assets, such as your home, your car, and even your life in some cases. It is even riskier not to have an estate plan in place to deal with the assets you have worked so hard to acquire throughout your life and to ensure these are left to your loved ones. You would think given the importance of properly looking after your assets and your family, that EVERYONE would have a Will. The truth is, well over 52% of people either don’t have a Will or haven’t updated it in a long time. No matter how big or small your estate may be, everyone over the age of 18 should have a Will.
Contrary to popular belief, your estate does not automatically go to your family after you die if you don’t have a Will. Failing to have an estate plan or a valid up to date Will in place can be very costly for your loved ones you leave behind, both financially and emotionally.
Enduring Powers of Attorney are often overlooked by many people when considering having their Will done or updated. There is also an assumption that making a Will and appointing an Executor doubles as appointing someone as your attorney. This is not right, and you must complete and sign a separate document in order to appoint someone, or a number of persons, to be your attorney. Enduring Powers of Attorney usually come into operation when you lose capacity due to an injury or illness (e.g. if you have a stroke and do not have the mental capacity to look after your affairs). If you lose mental capacity due to injury or illness and cannot look after your affairs, if you have not appointed someone as your attorney, your surviving spouse or family members may have to apply to QCAT or NCAT to be appointed. These Tribunals have been set up by the State Governments to make these decisions. Unfortunately, there is no guarantee that your family members will be appointed and in many cases the Tribunals appoint the State Public Trust Office to act as your financial administrator and attorney. This can cause many problems for your family.
Read more: Don’t blindly trust the Public Trustee – there are alternative options available
Read more: Families forced to take legal action against Public Trustees
Read more: Attwood Marshall Lawyers’ call for inquiry into NSW Trustee & Guardian backed by politicians
Here are the top 5 reasons you need to have a Will and an Enduring Power of Attorney.
Reason 1: Have your say – let everyone know what your wishes are
You get to have your say about who will inherit from you rather than the law taking over and making that decision for you.
Having a Will is the best way you can make sure that your family and children, or loved ones or charities, are taken care of after you pass away. If you die without a Will, the intestacy laws of the State or Territory where you live applies to your estate which is determined in a certain ‘running order’ depending on the relationship. For example, if you are married or in a de facto relationship, your surviving spouse and children are usually the main beneficiaries, but this is not always so. The law may not distribute your assets in the way you would like them to be distributed.
We live in an age that blended family structures are very common. When considering the intestacy rules in relation to blended families, many people prefer to tailor their Will to express their wishes reflecting their personal circumstances, rather than accept the “one-size fits all” option provided by the law. The other problem is when you are separated from your spouse but not yet divorced. If you die without being divorced, most of your assets will pass to your estranged spouse!
These days, most people have numerous assets with Superannuation, Life Assurance and employment entitlements often not considered. It’s important to plan carefully to ensure these assets are dealt with in the safest and most tax effective way. Getting proper estate planning advice from a lawyer who specialises in this area can also limit the prospect of someone claiming against your estate which again helps ensure your wishes are upheld.
Similar issues apply to who you want to appoint as your attorney in an Enduring Power of Attorney. By completing the document and appointing the people who you want to be your attorneys and how you want them to handle your affairs ensures that everyone in your family knows your wishes in the event that you have lost capacity. This can help avoid arguments between adult children and your spouse about what is to happen with your financial affairs and medical treatment.
Reason 2: Be in control as to who will look after your affairs after you are gone or if you lose mental capacity
You get to name an Executor and Trustee to administer your estate as opposed to having one appointed for you. An Executor is a term used to describe the person that you appoint in your Will to be entrusted with administering your estate. Your Executor has the task of managing and distributing your estate in accordance with your wishes outlined in your Will. This is a position of power and it is very important that you consider your options carefully when appointing the right person for this role.
When considering who to appoint as your Executor, you should ask yourself:
- Is the person you have chosen willing to act in the role?
- Are they trustworthy and have the skill set to be able to manage your estate effectively?
- Do they have a good relationship with beneficiaries so as to minimise disputes between parties?
- Will they obey the law and carry out the duties required of them in a timely manner?
If you do not have a Will the Court will appoint an administrator. An administrator has the same responsibilities as an Executor, however the key difference is that the Court will choose who manages and distributes your estate, instead of you making that decision for yourself. The best person for the job who you may wish to do this may not be who the Court chooses. Not to mention the delay and cost associated with processes that must be undertaken for an administrator to be appointed by the Court.
Being an Executor for someone’s estate can be a very complex and stressful role, especially if there is conflict within the family. An Executor can also have personal liability for certain debts of the Estate (e.g. tax to the ATO) if they are not careful. Sometimes, it may be better to consider appointing a professional to be your Executor or as a co-executor with a trusted family member to ensure your Estate is looked after properly. Attwood Marshall Lawyers are often appointed to act as Executor in estates for this purpose.
Appointing a professional to act as an Executor means that your estate will pay the reasonable costs of that person to act in that capacity. However, most surviving family members engage lawyers to act on their behalf to obtain a Grant of Probate and complete the administration of the estate. Accordingly, the appointment of a lawyer as an Executor or co-Executor does not necessarily increase the cost to the estate very much and ensures that your wishes are protected.
Once again, making a Will ensures who you have appointed carries out this very important function.
The same issues apply to your Enduring Power of Attorney. You need to very carefully consider who you appoint as your attorney, or attorneys, when you complete your document. Your attorneys will step into your shoes in the event that you lose capacity to handle your own affairs both in relation to financial issues, where you live, and your medical treatment options. For example, if you need to go into an aged care facility, your attorneys will need to handle this for you and make decisions about selling your house and obtaining proper financial planning advice and legal advice.
Many people only appoint one person to do this. It is our experience that it is better to appoint a minimum of 2 people to handle your affairs. This ensures that they “keep an eye on one another” and that the prospect of mismanagement or embezzlement is reduced. You also have the option of appointing a professional to be an attorney or co-attorney with a trusted family member. The downside of this is that it will cost for this person to act in that capacity, but the upside is that your assets and wishes are protected.
Reason 3: Protecting your children – appointing guardians for infant children
For those of you who have infant children or children suffering from a disability, it is very important that you appoint trusted family or friends to take over the role of guardians of your surviving children.
All families are different and have complicated issues, but the appointment of guardians in your Will (and in your Enduring Power of Attorney) can help resolve disputes amongst your surviving family members as to who will have the care and control of your children after you die.
There are never any easy solutions in relation to this aspect of your Will. In many cases the parents of the children disagree over who they would like to look after their children in the event that something unexpected happens to one or both parents. Having an updated Will that clearly sets out who you would prefer to be the guardians of your children can resolve any disputes within the family. It is a great opportunity for you to set out how you would like your children to be looked after. This includes issues such as the school that they are to attend, the house that they are to live in and general details concerning their upbringing and financial support during their lifetime.
Likewise, the same issues apply to where you lose your mental capacity as a result of injury or illness. You are still alive and life goes on for your children – therefore your attorneys need to be able to step in to handle your affairs if you are unable to do so. The appointment of guardians in your Enduring Power of Attorney will also resolve any disagreements amongst your family as to who is going to look after the children and your financial affairs generally. It will also help prevent a Tribunal referring the handling of your affairs to a State Government Public Trust Office.
Reason 4: Save your family from legal costs and emotional turmoil
Having your estate planning and legal documents in order can potentially save huge amounts of money wasted on legal costs and the inevitable emotional turmoil that goes with resolving disputes through the courts or through lawyers. There are many cases involving people who die without a Will or leave a badly drafted do it yourself Will kit. In either of these cases, your surviving family members will need to apply to the court as an administrator of the estate or alternatively, apply to the court for Orders concerning a do it yourself Will. Court applications can be very expensive for the legal costs incurred by the estate and if there are disputes between the beneficiaries, this can potentially lead to hundreds of thousands of dollars being spent by the estate to sort out these issues.
The same issues apply to having a current and valid Enduring Power of Attorney. This ensures that your wishes are upheld in relation to who you would like to handle your financial and medical affairs in the event that you lose capacity. Disputes concerning who should be appointed as your attorney and/or the administrators in an estate can often lead to Tribunals referring the handling of your affairs to the Public Trust Office. Your family members would certainly rue the day that the Government Public Trust Office was appointed for your estate or for your ongoing financial management in the capacity as an attorney.
Reason 5: Make things easier for your surviving family or loved ones
It is one of the most stressful things to lose your spouse, parent or grandparent unexpectedly. Imagine if your loved one dies without a Will and you then have to deal with the various Government agencies, banks, service providers and the multitude of other issues which arise after someone dies.
You may have already experienced this when you attempt to change details for a telephone account, Foxtel, Centrelink, Medicare or other agencies and providers that we deal with on a day to day basis. If someone has passed away or has lost capacity, these agencies refuse to deal with you based on “privacy concerns” or unless you can demonstrate to them that you have the legal basis for operating on that person’s behalf.
You can imagine your surviving family member or loved one attempting to deal with these providers and Government agencies hot on the heels of the emotional distress of your death. They will experience similar issues in the event that you unexpectedly lose capacity to handle your financial and medical affairs. Your surviving loved ones will face the same issues dealing with your treating doctors, dentists and hospitals. If you require urgent medical treatment or an operation, the doctors and hospitals will often not proceed with the treatment unless the paperwork has been signed by your duly appointed attorneys. Likewise, in the event of your death, Government agencies and providers will not deal with anyone other than your duly appointed Executor. If there is no Will or Enduring Power of Attorney, this causes huge difficulties for your surviving loved ones as they cannot do anything until someone is appointed as your attorney if you lose capacity and similar issues arise if there is no Will.
All Government agencies and treatment providers will require a certified copy of the Will and your Death Certificate before they will even engage in any dealings with your family. It is therefore very important that even if you do not wish to make a Will and Enduring Power of Attorney for your own purposes, consider what your surviving loved ones will go through if you do not spend the time to have these documents prepared.
Read more: Estate Planning 101
Read more: Enduring Power of Attorney – be aware of changes coming
Read more: Don’t blindly trust the Public Trustee – there are alternative options available
We want you to have peace of mind this Christmas
As a leading estate planning firm, Attwood Marshall Lawyers take a holistic approach to your estate planning needs. Your documents will be prepared by an experienced lawyer who practices exclusively in the area of Wills and Estate Planning.
Book your appointment with our friendly team by contacting Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, mobile 0423 772 555 or email dtolley@attwoodmarshall.com.au
