A carefully constructed estate plan is vital to ensuring your legal wishes can be understood, respected and executed. By taking control of these matters now, your chosen representatives, who most likely will be amidst their own bereavement, will have a clear and effective framework for your estate on death, or control over your financial and personal affairs on incapacity, avoiding additional stress, expense and delay.
Estate planning often calls for more than a ‘simple’ will. Superannuation, life insurance, family trusts or blended families, may mean you need something more. Tax implications, stamp duty, asset protection and distribution strategies must be carefully considered.
Wills & Testamentary Trust Wills
A valid will allows you to nominate the beneficiaries who receive your assets. If you do not have a will, the intestacy laws of New South Wales will control who receives those assets.
Only personally held assets, e.g. your home, property, shares, car, cash etc can be distributed via a will. Assets held in other ways will not fall within the scope of your will. These assets can include property owned as joint tenants, most superannuation and life insurance proceeds and assets held in discretionary trusts.
A testamentary trust in a will comes into effect after your death. Assets can be protected in the testamentary trust and managed in accordance with its terms. A testamentary trust may offer tax advantages and can be suitable for beneficiaries who may be vulnerable, require special care or be less financially or mentally capable of managing the inheritance on their own.
Enduring Powers of Attorney
A power of attorney is a powerful legal document in which you appoint a trusted person to attend to financial matters like pay your bills, arrange insurance or manage property. A power of attorney can be general, specific, corporate or enduring.
An enduring power of attorney is important because it operates even when you have lost capacity to make legal and financial decisions and manage your own legal and financial affairs. A loss of capacity can arise with the onset of dementia or other mental or physical conditions that impact cognitive functioning. If you have already lost capacity, it is too late to make an enduring power of attorney.
If you do not make an enduring power of attorney and you lose capacity, there is a very real possibility that the NSW Civil and Administrative Tribunal will nominate who should handle your financial affairs on your behalf.
Superannuation & Life Insurance
Superannuation and life insurance are often the largest assets of an estate. However superannuation death benefits do not automatically form part of your personal estate in your will. Life insurance, may or may not be linked to your superannuation fund which may have tax impacts for beneficiaries. Similarly, superannuation benefits can be paid in different ways which present different tax considerations.
A valid, binding death benefit nomination (sometimes referred to as the “super will”) can ensure the funds are directed to your intended beneficiaries. Otherwise, the trustee of your super fund has discretion to decide who receives your superannuation death benefits. In the case of self managed superannuation funds the trustee paying the death benefit is often a family member, or acting in a personal capacity or as an officer of the corporate trustee.
Enduring Guardianship Appointments
An enduring guardianship allows you to appoint a trusted individual to be your guardian should you become incapable of making lifestyle decisions or giving consent to medical treatment.
While your next of kin may be able to make certain decisions on your behalf, there are limitations to what they can do. If you do not appoint a guardian and you lose capacity, the NSW Civil and Administrative Tribunal may need to become involved as they hold the default power to nominate who should make your lifestyle decisions and consent to medical treatment on your behalf.If you have already lost capacity, it is too late to make an enduring guardianship appointment.
The enduring guardianship appointment gives your appointed guardian the best flexibility to make lifestyle and health decisions based on your particular evolving situation as it presents itself.