Your Top 10 Questions About Estate Plans, Answered.

Thinking about your Estate Plan can seem like an overwhelming and overly complex exercise. We aim to simplify the process and ensure our advice is simple and easy to understand.  

An Estate Plan comprises your

• Will;
• Power of Attorney; and
• Appointment of Medical Treatment Decision Maker documents.

These documents are important documents for any adult to have in place at every stage in their lives.

1. What happens if I die without a Will in place?

If a person dies without a will, they are considered to have died ‘intestate’ and the laws of the state determine who will inherit your estate and in what proportion.  In this situation, there is no guarantee that this distribution will be in accordance with your wishes and it can result in conflicts regarding ‘what you would have wanted’. Without a will, the allocation of your estate can become an unnecessarily lengthy and distressing process. A valid will offers you the comfort of knowing that your assets will be managed efficiently and distributed as you desired.

2. Who should I appoint as my Executor of my Will?

An Executor is the person/s you appoint in your Will to manage the affairs of your Estate following your passing. Your Executor is responsible for applying for the Grant of Probate so that your assets can be gathered and distributed as per your wishes expressed in your Will. You should appoint someone that you inherently trust. This person may be a spouse, your siblings, a friend, your children, or a family member. You are able to appoint your Executor/s solely, alternately or jointly.

3. Can my Executor hold my children’s benefit until they attain a certain age?

Yes, you can make provision for the children to receive their inheritance upon attaining a certain age. What age? Most people tend to select 25 or even 30 years of age as 18 years of age is still considered quite young to be inheriting a significant sum of money. Ultimately though, the decision is yours to make.

4. What happens to funds held on trust pending a beneficiary of my Will attaining a certain age?

When funds are held on Trust for a beneficiary, say until that beneficiary turns 25 years old, they are invested in an Approved Trustee Investment governed by the Trustee Act 1958 (Vic) to earn interest at the prescribed rate.

5. Will my beneficiaries be taxed on any monies received by way of an inheritance?

There is currently no inheritance tax applicable in Australia however other taxation schemes may apply such as Capital Gains Taxation.

6. Is superannuation treated differently to other assets in my Will and why does my superannuation policy call on me to complete a Binding Death Nomination?

A Binding Death Nomination is a written notice to the Trustee of your superannuation fund explicitly stating who you wish inherit your superannuation entitlement. Many of our clients nominate their Estate which will mean that their superannuation entitlement will form part of the residuary estate and be distributed in accordance with the terms of their Will. Others simply nominate their spouse as their spouse is exempt from any “back door tax”. Ultimately, you can nominate whoever you like however, if you do choose to nominate entities and individuals other than your estate or your spouse, you should seek tax advice before doing so as the entitlement may then become taxable.

7. What is an Enduring Power of Attorney (financial)

An Enduring Power of Attorney is a document that appoints an individual/s to make financial and personal decisions for on your behalf in the event you are unable to. This document only has effect whilst you are alive and ceases upon your death.

You can choose to have your Attorney/s be able to make both financial and medical decisions for you, or can choose to only permit them to make financially related decisions only. You further have the ability to place conditions on the Attorney if you deem it necessary to do so. For example, you can instruct your Attorney to sell all real estate except for your principal place of residence if something were to happen to you and funds were urgently required.

You are able to appoint as many Attorneys as you like and appoint them either jointly or severally, jointly meaning they are both required to agree on actions taken or severally, meaning only one Attorney is required to authorise an action on your behalf.

8. What are some examples of when I would need my Attorney under Power to act on my behalf?

Some examples of when the appointment of an Attorney under Power can be useful include:

• Real Estate transactions;
• Paying bills (i.e. gas, electricity, water);
• Applying for moratoriums (holiday periods/extensions of time) on loans and mortgages
• Buying and selling of property to fund a deposit bond for a retirement or special care home;
• Accessing bank accounts to be able to pay for urgent medical care, surgery etc;
• Applying to Centrelink to obtain government benefits;
• Actioning and assisting in making a WorkCover claim;
• Decisions pertaining to motor vehicle; and
• Many other decisions of a similar and related nature.

9. What is an Appointment of Medical Treatment Decision Maker?

This is a document which authorises an individual to make medical decisions on your behalf. This document only has effect whilst you are alive and ceases upon your death.

For this Appointment, unlike an Enduring Power of Attorney (financial), you can only appoint one individual to make such decisions at any one time. If you choose to appoint two decision makers, then the second appointed decision maker will only act when the first appointed decision maker cannot. 

You can choose whether you wish for the authority to come into effect immediately when you have been deemed to have lost the capacity to make decisions in your own interests or only once your appointed decision maker has obtained written advice from a medical professional confirming that in that person’s opinion you have been deemed to have lost capacity. The first option ensures that if an accident were to happen, you would have a clear decision maker in place without delay.

10. What are some examples of when I would need my Appointed Medical Treatment Decision Maker to act?

Some examples of when you may need your appointed decision maker to act on your behalf include:

• Providing authority for invasive/significant/expensive medical surgery and/or medical treatment to proceed;
• Providing authority for a particular treatment to be permitted in consideration of a particular person’s religion and/or personal beliefs; and
• Decisions pertaining to life support.

Disclaimer: This article contains advice that is general in nature only and is not intended to be acted upon without the benefit of professional legal and/or accounting advice taking into account the specifics of your circumstances.