Wills and Power of Attorney (PoA)
A WILL
An awkward subject but the blunt interpretation of Estate Planning is the process of setting up your affairs now so your assets are distributed to the people you choose when you pass away. There is nothing worse than leaving your estate to be distributed by the decision of a Court or super fund trustee who will just go by the state probate laws and that could mean certain people get the wrong amounts.
If you die without a Will, that is called ‘dying Intestate’ and your assets will be distributed in accordance with the laws of the state or territory that you live in. Every state and territory has different distribution laws and amounts and these could be drastically different to your personal wishes.
The next problem dying intestate or without a Will can be for you is the time and cost involved in applying for probate. Your next-of-kin will need to apply for the Supreme court for ‘Letters of Administration’ then be granted Probate.
They will probably need to engage a probate lawyer and all of this will need to be paid for from your Estate which means less money is paid to you or your beneficiaries.
The last time we assisted a client to apply for Probate (because her husband died Intestate) it took 10 months and almost $25,000 in legal fees and court costs to apply for probate.
Because she had a minor under her care the court awarded the bulk of the estate to the minor. We had to apply for guardianship as Trustee over the minor and that required a Barrister who charged $800 per hour to represent the child.
So based on that outcome you can see how the funds are quickly absorbed in legal fees and all of this could have been avoided for the cost of a $500 Will executed by a probate lawyer!
A good Estate Plan will include:
- A Will and Power of Attorney that reflects your current wishes
- Details of any funeral bonds
- A funeral plan
- Your insurances must be up-to-date and nominated correctly
- Your super & pension funds must have the correct nominations, such as reversionary nominations for income funds versus non-lapsing binding death nominations for accumulation funds
- Your life insurance should be setup correctly with the right beneficiaries nominated
- If necessary, a testamentary trust to provide specific assets to be controlled and managed by a Trustee on behalf of the beneficiaries. This can provide some asset protection and tax planning opportunities on behalf of the beneficiaries, especially if they have special needs, problematic and impulsive behaviors or not competent to manage funds themselves.
Did you know there are 3 types of Powers of Attorneys? It’s imperative that you choose the right Power of Attorney, see below.
The 3 types of Powers of Attorney (PoA) are:
| General PoA | They can make financial and legal decisions for you for a specific time period such as when you’re away on vacation. This type of PoA becomes invalid when that event ends of if you lose mental capacity to make decisions yourself |
| Enduring PoA | They can make financial and legal decisions on your behalf if you lose the capacity to make decisions for yourself IE if you were in a medically induced Coma |
| Medical PoA | They can make decisions about your medical treatment if you become mentally or physically incapacitated to make decisions for yourself, such as blood transfusions whilst in a medically induced Coma |
Most importantly, review your Will and Power of Attorney when your life changes or at least every 3 years to ensure it reflects your current wishes.
All of the above are a good example of proper estate planning and always use a qualified financial adviser who can involve the right legal professionals to legally execute the documents and check off your estate plan.
Want to Know More?
If you want help, more information or advice on organizing your Will and Power of Attorney then fill out the Contact Form below and an estate planning adviser will contact you to discuss your unique situation and answer your questions.
You can also visit the State Trustee to learn more about Wills and Powers of Attorney
Learn more about Testamentary Trusts on this page