We all lead busy lives and as such it’s easy to make estate planning tomorrow’s job. Let’s face it, the likelihood of something happening today is very low. The problem is if something does happen which requires an enduring power of attorney (EPoA) or a will, it’s likely to coincide with a very traumatic and unexpected event. This will not be a time when you have the energy or patience to deal with complex government and legal bureaucracy. We have compiled a brief Q & A below to provoke some thought and hopefully some action for those who haven’t thought about these topics before.

It is typically recommended that all adults should have a will and EPoA in place. Sudden illness, injury, or demise can happen at any time. Taking time to reflect on how you want your assets managed when you are no longer able to, provides clarity to your loved ones and ensures your intentions are honoured.

It's crucial to emphasise that the information provided here offers general guidance. Estate planning is intricate and personalised, with laws varying across jurisdictions. Therefore, the insights here should complement, not replace, tailored legal advice that fits your unique situation.

What happens if I lose the capacity to manage my affairs?

An enduring power of attorney (EPoA) empowers you (the principal) to appoint a trusted individual(s) (the attorney(s)) to make decisions on your behalf in the event of incapacity. This covers both temporary incapacity due to an accident and permanent incapacity due to deteriorating health. Choosing your attorney(s) thoughtfully is paramount, as they'll wield significant power over your affairs, and their decisions are legally binding.

An EPoA generally remains valid until it is revoked or replaced with a new EPoA. EPoAs are only valid while the principal is alive. Upon death, the EPoA ends, and all decisions are made by the principal’s executor, as per their will.

What happens if I don't have an EPoA?

If you lose capacity without a valid EPoA in place, the only option is for a family member, close friend or a trusted professional (such as a lawyer or financial adviser) to apply to the relevant state authority to appoint a person to be your administrator (to make financial decisions) and/or your guardian (to make personal and health decisions). This situation can lead to unnecessary stress and long delays to any decisions that need to be made.

Why is having a will important?

A will outlines the distribution of your assets upon your death, also encompassing guardianship for minor children, ongoing trusts, and even your funeral preferences. Appointing an executor ensures that your wishes are fulfilled, and your debts are appropriately managed. It’s important to note that wills can be contested, so having one doesn’t guarantee the distribution of your assets as per your stated wishes.

What happens if I die without a will?

Dying intestate, or without a will, results in asset distribution based on state laws, not your intentions. This could trigger unintended beneficiaries and potential family disputes. Having an up to date will safeguards the intended recipients of your assets.

What assets potentially sit outside a will?

Certain assets, such as those held in joint tenancy, superannuation, life insurance policies, and trusts, may not be governed by your will. These assets often pass directly to beneficiaries you've designated or as stipulated by the ownership structure.

What's unique about superannuation in estate planning?

While excluded from your will, superannuation necessitates careful handling. Binding nominations offer certainty by directing the trustee on distributing your super benefit. Some super funds only offer binding nominations that lapse every three years, so it’s important to check that your nomination remains in force. Conversely, non-binding nominations grant flexibility, with the trustee making final decisions. A reversionary pension nomination ensures a seamless income stream to a beneficiary after your passing. There are rules regarding who you can nominate as a superannuation beneficiary, so seek advice from your super fund or adviser to ensure your nomination is valid.

What is probate and will I need it?

Probate is the legal validation and execution of a will's instructions. It entails confirming the will's authenticity, appointing an executor (if named), and overseeing asset distribution. Not all estates require probate; it depends on factors like the type and value of assets. The process can extend up to six months.

How does the estate finalisation process work?

Even with the aforementioned documents in place, distributing your assets to beneficiaries takes time. At a minimum, beneficiaries must provide a death certificate and proof of identity before assets are released.

In the intricate landscape of estate planning, seeking advice from legal professionals is indispensable. This ensures that your unique circumstances are accounted for, aligning your intentions with legal requirements and offering your loved ones the security they deserve.