Although it can be confronting, it is important to make plans for what is to happen to your assets and affairs after you die, and who is to take charge of your affairs in the event you lose capacity. This involves more than just having a valid Will, something that less than half of Australians actually have. These intentions will be expressed across three main instruments: Will, Power of Attorney and Guardian document.
If you pass away without a valid Will, your estate will be distributed to eligible relatives in accordance with a prescribed statutory formula and order of priority, and if you do not have any eligible relatives at the time of your death, your assets will pass to the State.
Making a valid Will gives you and your loved ones the peace of mind that comes from knowing that you have made your testamentary wishes known in a formal, legally binding document and that, in the event of your death, your assets will be distributed according to your directions to the persons whom you want to benefit from your estate rather than in accordance with an arbitrary statutory formula.
Having a valid Will also means you can put a trusted person of your choosing in charge of overseeing the administration of your estate, which is not necessarily the case if you die intestate, i.e. without a Will (or where your Will is determined by a Court to be invalid).
You may already have a Will. If so, you should consider having it reviewed, particularly if it was made some time ago, you have since undergone a separation or divorce, or if your circumstances have changed. A valid but badly drafted Will might be ineffective in making clear your testamentary wishes, or might fail in part.
Having a properly drafted Will that clearly expresses your intentions and wishes will give it greater protection in the event it is challenged by someone who has been left out. In circumstances where your wishes are not clear or you have not made adequate provision, eligible persons may apply to make a family provision claim, where, if successful, the court can make an order to give them a share (or a larger share) of the estate.
Just as important as organising your affairs for when you pass, is organising them to be prepared in the event you lose capacity or are not in a position to manage your affairs yourself. A Power of Attorney is a legal document that gives another person the power to deal with your assets and financial affairs while you are still alive. These can be created to become effective in two circumstances:
A General Power of Attorney will allow someone to look after your affairs when you are not able to, for example, when you are overseas. However, a General Power of Attorney will cease to have effect if you lose capacity after its execution. An enduring Power of Attorney, by contrast, will continue to be effective where you lose capacity after its execution. In NSW Powers of Attorney need to be registered with NSW Land Registry Service to be effective in relation to dealings with respect to land.
Importantly, appointing a Power of Attorney does not give someone the ability to make medical or lifestyle decisions for you. In NSW, these powers can be appointed to someone under an Enduring Guardianship; however, your Enduring Guardian will only be able to make decisions for you if, or when, you lose capacity.
Powers of Attorney and Guardianship documents can specify limitations on the powers to be exercised by the Attorney or Guardian. An Attorney and Guardian have duties to act in the best interest of the person who confers these powers on them and they cannot normally use these powers for their own benefit or profit.
Ensuring that you are prepared for the uncertain future means considering planning that goes beyond the creation of a valid Will. If you’d like to discuss matters around planning your estate, whether it be making a Will or reviewing an existing one, or appointing a Power of Attorney or Enduring Guardian please feel free to contact us to chat further with one of our friendly lawyers.