No-one wants to think about death in the prime of life. But it’s important to decide what will happen to your assets when you die. Find out how you can give instructions to your family about your legal and medical preferences should you fall ill or lose the capacity to make those decisions yourself.
WILLS
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.
Assets not covered by a Will
Only assets owned exclusively by you are covered by a Will. Examples of assets not covered by a Will include:
- Assets held by a superannuation fund, which generally go to a dependant spouse or children
- Assets owned by discretionary trusts, which do not become part of your estate as they remain the property of the trust
- Proceeds from a life insurance policy, which are paid directly to the beneficiary nominated by the insured person, and do not form part of the deceased’s estate.
- Assets owned by unit trusts or companies that are controlled by you, although the shares or units of such trusts and companies will be part of your estate.
Many of the assets that constitute an estate can be contested in a Will dispute so it’s important to get the right legal advice when preparing your Will to avoid any dispute or confusion between your beneficiaries.
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
- ACT – Public Trustee and Guardian 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
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Create your own Will online
You can create your own will 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.
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.
Contesting a Will
In some circumstances, you may feel that you have been unfairly provided for in a Will, or wish to contest the validity of the Will itself. There are several options open to you, depending on your reasons for challenging the Will. These include:
- Testator’s family maintenance claims, where the claimant believes they have not been appropriately provided for
- Lack of testamentary capacity claims, where the claimant believes the deceased person lacked the mental capacity to understand what he or she was signing
- Undue influence claims, where the claimant believes the deceased person was a victim of coercion or fraud
- Breach of trust claims, where the claimant believes an executor or trustee has failed to administer a Will or trust properly.
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ESTATE PLANS
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:
- Will
- 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.
Testamentary trusts
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.
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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.
Other documents to consider
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. Nominate people that you know are trustworthy, if possible financially astute, and likely to be around when you need them.
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Your legal and financial housekeeping
Once your paperwork is in order, it will help your executor and family if you list the legal documents you have and where they are kept.
Keeping a record of your personal information and notes on how your legal documents, assets and investments are arranged can also help you.
Here is a list of key documents to keep:
- Birth certificate
- Marriage certificate
- Will
- Enduring power of attorney
- Advance healthcare directive (also called a living will)
- Personal insurance policies
- House deeds
- Home and contents insurance
- Deeds and insurance policies for any other real estate you own
- Bank account details
- Superannuation papers
- Investment documents (securities, share certificates, bonds)
- Medicare card
- Medical insurance details
- Pensioner concession card
- Any pre-payments of funeral investments
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