In the past it was common for a lawyer to ask a client if they had a Will. Now we ask clients if they have an estate plan.
This change in terminology has not only arisen because the range of documentation offered to clients has expanded, but also because more clients now have sophisticated asset holding structures and are embarking on overseas travel. Self-managed superannuation funds, family trusts and European holidays were once only for the elite but this is no longer the case.
In addition, medical advances and the increase in the number of people suffering from conditions which affect legal capacity, such as dementia, also mean that we are living longer - potentially without the mental capacity to deal with our affairs.
As a result, it is prudent to have documents in place which will appoint someone to look after your affairs when you cannot and to make sure your assets are distributed in accordance with your wishes.
To understand why you may need such things as an Enduring Power of Attorney and Enduring Power of Guardianship it is necessary to know what each document does. We have summarised the common estate planning documents below:
- Will - is a legal declaration by which a person, the testator, names one or more persons to manage his or her estate and provides for the distribution of his or her property at death. This document only takes effect upon your death and you may only distribute assets which are held in your personal name. Assets which are held via joint tenancy will pass to the surviving joint tenant automatically and will not form part of a person’s estate. Similarly life insurance and superannuation do not generally automatically form part of your estate.
- Enduring Power of Guardianship - is a legal document that allows you to nominate the person who will make personal, lifestyle and health care decisions on your behalf when you have lost the capacity to make such decisions. The Guardian’s powers are limited to what you specify in the Enduring Power of Guardianship document.
- Enduring Power of Attorney - is a document by which you appoint your nominated Attorney/s to make decisions on your behalf about your property and financial affairs. An Enduring Power of Attorney can be operational while you still have capacity (depending on the terms of the document) and is useful if you are physically unable to attend to financial matters, for instance, as a result of overseas travel or injury.
- Advance Health Directive - is a legal document in which an adult person with capacity sets out their decisions about future medical treatment. An Advance Health Directive only comes into effect when you have lost capacity and are unable to make reasonable judgments about medical treatment.
- Binding Death Benefit Nomination - is a notice given by a superannuation fund member to the trustee of their superannuation fund requiring a death benefit to be paid to the member’s nominated dependant(s) and/or their legal personal representative.
- Buy – Sell Agreement (also known as a buyout agreement) – is a contract entered into between co-owners of a business that governs what should happen to the business as a result of a specific event such as death or bankruptcy of a co-owner.
How can I find out more?
At IRDI Legal, our experienced and specialised Wills and Estates Team can assist you with all aspects of your personal succession planning and any questions you may have, including preparing and advising on Wills, Enduring Powers of Attorney and other documents. Please contact us to find out more.