Estate planning essentials and why it’s important

Have you got a current Will?

If you pass away without a Will, your assets will be distributed based on the relevant laws in your state.  A Will gives you peace of mind that:

• You get to decide who gets your assets and personal effects
• You have documented plans in place for your children, especially if they’re under 18, about who will care for them if you have passed.

It’s also important to keep your Will up to date. Think about how long it has been and how much your life has changed since you last updated it.

Have you got life insurance outside of super?

If you have any form of life insurance policy that is separate to your superannuation account, you need to let your insurance provider know who should receive the insurance payout in the event of your death.

Who will receive your super?

Many people aren’t aware that your super account isn’t paid to your estate in the event of your death. Where the money from your super goes depends on what you have in place with your super fund. You need to complete a nomination of beneficiaries and there are three different options available to you – which one you choose can be really important. You’ll also need to check what options your super fund provides, as not all funds offer all options:

• Non-binding nomination of beneficiary

  This is an instruction to the trustee of your super fund, asking them to distribute your superannuation investment as per your instructions. Please note that whilst you’ve instructed how you’d like your investments paid, the trustee has the ultimate decision on how your benefits are distributed and they take into account your dependant relationships when you passed away.

• Binding nomination of beneficiary

  For this option, once you’ve completed and submitted your instructions to your superannuation or pension fund, the fund is obliged to pay the funds as per your instructions. Please note that this nomination will lapse though, generally every three years and will need to be renewed.

• Non lapsing nomination of beneficiary

  This is an instruction that you provide to your superannuation fund, where the there’s no expiry date and the trustee of the superannuation fund MUST follow your direction. It’s like a Will for your superannuation money as your Last Will and Testament doesn’t have the power to decide where your superannuation money is allocated after you pass away, unless it is paid to your estate.

   

What is a Power of Attorney and do you need one?

A Power of Attorney, sometimes known as a POA, is a document that legally allows someone else to make important decisions for you if you’re not able to. This includes financial, business and personal decisions, and in some states (particularly the ACT and Queensland), it gives the authority for that person to also make decisions about the health care for another person.

Types of Power of Attorney documents

You can create a Power of Attorney that best suits your situation and there are different types of directions you can create:

• Both General and Enduring Power of Attorneys allow you to appoint another person to act on your behalf.
• You would use a General Power of Attorney when you’re capable of making your own decisions, but for some reason can’t. For example, you may be on extended travel and need to have the document in place, so that important decisions can be made on your behalf while you’re away. Depending on your situation, you would include a date on the document outlining when you wanted the arrangement to cease, potentially on your return from your travels.
• An Enduring Power of Attorney is generally applicable if you’re unable to make important decisions for yourself, either because you’re physically or mentally impaired. You can include specific instructions and conditions that must be met before any action can be taken on your behalf, or you can put limits on the decisions that can be made for you, in the event that you’re not able to make decisions for yourself.
• There is also a third version, known as a Limited Power of Attorney and this one is a little different; in this instance your delegate only has approval to make some decisions on your behalf and not all decisions, and you can specify those decisions that can or can’t be made on your behalf.

Here are some examples of decisions that could be made on your behalf, once you have a Power of Attorney in place:

• Some of the financial actions your appointed delegate can make on your behalf include investing money for you, paying your bills, arranging your tax returns, renting or selling your belongings, transacting on your bank account.
• Business decisions such as selling your business and managing your staff can be delegated.
• Depending on which state or territory you live in, your delegate can decide on:
  • your living arrangements, for example where you live and who you live with.
  • medical procedures and donations, within certain limits.

How do you create a Power of Attorney?

Your lawyer can draw up the paperwork for you. Your delegate is the person you nominate to make your decisions for you. The delegate can be anyone you choose who you trust, for example a lawyer, accountant, colleague, partner or family member, as long as they are:

• Capable of making decisions and signing any required documents on your behalf (also known as being ‘of sound mind’)
• The owner, operator or employee of a nursing home or care facility where you live
• Not a disclosed bankrupt
• A legal adult.

If you want or need to put a Power of Attorney in place, speak to your lawyer so that they can document your specific instructions. Make sure this responsibility is with someone you can trust, in the event that you can’t take care of for yourself.

There are lots of benefits associated with estate planning. Mostly it provides peace of mind, knowing your assets will be distributed the way you want them to be.