Your lock-down to-do list - Estate planning

Estate planning can be something which many people continually put off until the right opportunity arises. However with many people facing the prospect of having more time on their hands, it may be the clearest opportunity for people to get to those items which have remained anchored to the bottom of their to do lists for years.

Proper estate planning is essential, but it often languishes on the bottom on the day to day list of priorities ? so the current lock-down restrictions present an opportunity to bump it up the list to its rightful place.

This article discusses Power of Attorney, Wills and Death Benefit Agreement/Nomination documents and the importance of having them in place for every adult and their loved ones.

 

Powers of Attorney

If you live in New South Wales or Victoria, Cleardocs allows you to create a Power of Attorney document (in New South Wales a Power of Attorney is known as an Enduring Guardian, but the terms essentially refer to a document which has the same effect). These documents provide for the appointment of another person to make personal or financial decisions (or both) on your behalf, in the event you no longer have capacity to do so.

The person you would appoint is known as an "attorney", and you can choose when their appointment starts. This could be, say, when the document is signed, when the person appointing the attorney ceases to have decision making capacity, or on a particular date that you nominate.

With the Cleardocs Power of Attorney products, you can specify the exact type of decisions you would like a Power of Attorney to make, and those that would be left to you.

It's a good idea to execute a Power of Attorney, even if you have full capacity now. You can elect for the document to come into effect only in the event that you cease to have decision-making capacity, and the Cleardocs Power of Attorney documents allow you to specify in detail the types of decisions you would like another person to make for you. You can certainly appoint different attorneys for financial and personal matters under the document, and you can even impose conditions on the exercise of the attorney"s power - so that your true wishes are front and centre.

In New South Wales, you can also create an "Advance Health Directive". This document would not appoint someone to make decisions for you, it would merely state your wishes or direction for any health care you might receive for various conditions in the future.

ClearWill

It goes without saying that keeping an effective Will that reflects your true wishes is a fundamental duty you owe to those important to you. Not only will it ensure your loved ones are appropriately provided for, but it will avoid any disputes arising in the event that you pass away.

You should also review your Will every 2-3 years to ensure it reflects your wishes and incorporates any significant assets you might have accrued during this time. When updating your Will best practice involves preparing an entirely new document.

You will need to appoint an executor. This is the person who deals with a deceased person"s estate or assets and who administers your Will and estate. They can be a professional executor (i.e. your lawyer or accountant), or any person you know and trust, really. The Cleardocs Will includes clauses to make payment of a professional executor easy should you wish to have one.

One option open to married and de facto couples is to create "mirror Wills". These are essentially Wills that say the same thing (for example, that they leave everything to one another and then upon the death of the second of them the estate will pass to their children). Cleardocs has a function that allows you to deal with this quickly to save time.

There are a number of personalised clauses that you can choose from, that will allow you to do any or all of the following:

  • choose whether you want your will to survive your marriage (in the event that you remarry);
  • appoint guardians for children under 18 years old;
  • make specific gifts of property;
  • make cash gifts (and/or to charities);
  • divide your assets in equal or unequal shares;
  • make funeral directions; and
  • create minors trusts (this protects a minor's inheritance until they turn 18 or a later age nominated by you).

The "ClearWill with Testamentary Trusts" is a separate product that can be used if you wish to establish a trust/s (other than a minors' trust) within your Will. Such a trust begins after the Will maker dies, with certain provisions of the Will operating as the trust deed. A key benefit of holding assets on trust is it attracts a lower tax rate (depending on all of the circumstances).

Death Benefit Agreements and Death Benefit Nominations

The money in your super account does not form part of your estate when you pass away. So you need to have separate documents that govern how these benefits are dealt with and to whom they are paid.

If there is no Agreement or Nomination in place, the surviving trustees (or directors of the corporate trustee) are able to distribute the monies at their discretion ? which might even involve them distributing it to themselves.

Like your Will, you should update the Agreements and Nominations regularly. In fact, a binding Death Benefit Nomination will actually expire after 3 years if it is not confirmed, so if you have one of these in place you cannot simply set and forget.

The key difference between these documents are:

  • a Death Benefit Nomination can be either binding or non-binding (as in, merely a direction that does not absolutely need to be followed ? it's up to you) on the trustees who are to arrange for the relevant amounts to be paid when a member dies. It will also expire after 3 years (unless you confirm it);
  • whereas, a Death Benefit Agreement is binding and remains permanent until a member revokes or replaces the agreement.

A Death Benefit Nomination comes at no extra cost when you order an SMSF set up using Cleardocs.

Now is a good time to get started (once you have cleaned your silver and reorganised your sock drawer of course) and the Cleardocs Estate Planning products allow you to keep documents that incorporate all of the clauses important to you. Creating or updating these important documents will take next to no time using the Cleardocs documents. There really is no more appropriate time than now to get your affairs in order.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on a range of estate planning topics here.

Order Cleardocs Estate Planning document packages