An estate plan includes your will as well as any other directions on how you want your assets distributed after your death. It includes documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.
You must be over 18 and mentally competent when you draw up the legal agreements that form your estate plan. Key documents might include:
- Superannuation death nominations
- Testamentary trust
- Powers of attorney
- Power of guardianship
- Anticipatory direction
If you have made a binding nomination in your super or insurance policies, the beneficiaries named in those policies will override anyone mentioned in your will. If you have a family trust, the trust continues and its assets will also be distributed according to the trust deed, no matter what is written in your will.
You should ask a legal professional to check your estate plan. A good estate plan should minimise the tax paid by your heirs, and help avoid any family squabbles.
A will takes effect when you die. It can cover things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you'd like donated to charities and even instructions about your funeral.
Your will can be written and updated by private trustees and solicitors, who usually charge a fee. Some Public Trustees will not charge to prepare or update your will, but only if they act as the executor of your will. Other Public Trustees may only exempt you from charges if you are a pensioner or aged over 60. Check with the Public Trustee in your state or territory.
It's estimated that nearly half of all Australians die without a will, or 'intestate'. Don't let this happen to you. Make a will today. If you die intestate or your will is invalid, an administrator appointed by the court pays your bills and taxes from your assets, then distributes the remainder, based on a pre-determined formula, which may not be how you intended your assets to be distributed.
If you die intestate and don't have any living relatives, your estate is paid to the state government.
- ACT - Public Trustee for the ACT
- NSW - NSW Trustee and Guardian
- Northern Territory - Office of the Public Trustee
- Queensland - The Public Trustee of Queensland
- South Australia - Public Trustee South Australia
- Tasmania - Public Trustee Tasmania
- Victoria - State Trustees Victoria
- Western Australia - Public Trustee Western Australia
You can buy will kits online but it's a good idea to ask a solicitor to review your will to make sure everything is in order. If a will isn't signed and witnessed properly, it will be invalid.
Keep your will valid and up to date as your legal rights change, specifically if you marry, divorce or separate; have children or grandchildren; if your spouse or beneficiaries die; or if you have a significant change in financial circumstances.
Powers of Attorney
Appointing someone as your power of attorney gives them the legal authority to look after your affairs on your behalf.
Powers of attorney depend on which state or territory you are in: they can refer to just financial powers, or they might include broader guardianship powers. You will need to check with your local Public Trustee.
Generally speaking, there are different types of power of attorney:
- A general power of attorney is where you appoint someone to make financial and legal decisions for you, usually for a specified period of time, for example if you're overseas and unable to manage your legal affairs at home. This person's appointment becomes invalid if you lose the capacity to make decisions for yourself.
- An enduring power of attorney is where you appoint a person to make financial and legal decisions for you if you lose the capacity to make your own decisions.
- A medical power of attorney can make only medical decisions on your behalf if you become unable to do so yourself.
You can prepare a few other documents to help your legal appointees and family as you grow older, including:
- An enduring power of guardianship that gives a person the right to choose where you live and make decisions about your medical care and other lifestyle choices, if you lose the capacity to make your own decisions.
- An anticipatory direction records your wishes about medical treatment in the future, in case you become unable to express those wishes yourself.
- An advance healthcare directive (or living will) documents how you would like your body to be dealt with if you lose the capacity to make those decisions yourself.
The documents you choose to draw up will depend on your situation, and the responsibilities you are happy to entrust to others. Get legal advice if you are not sure.
Choosing your Powers of Attorney
Nominate people that you know are trustworthy, if possible financially astute, and likely to be around when you need them.
A testamentary trust is a trust set out in a will that only takes effect when the person who has created the will, dies. Testamentary trusts are usually set up to protect assets.
Here are some reasons why you would create a testamentary trust:
- The beneficiaries are minors (under 18 - 21 years old)
- The beneficiaries have diminished mental capacity
- You do not trust the beneficiary to use their inheritance wisely
- You do not want family assets split as part of a divorce settlement
- You do not want family assets to become part of bankruptcy proceedings
A trust will be administered by a trustee who is usually appointed in the will.
A trustee must look after the assets for the benefit of the beneficiaries until the trust expires.
The expiry date of a trust will be a specific date such as when a minor reaches a certain age or a beneficiary achieves a certain goal or milestone, like getting married or attaining a specific qualification.
Bridges Financial Services Pty Ltd (Bridges) may use information you provide to contact you to arrange a meeting with a Bridges financial planner to provide you with financial advice or financial products.