A Conversation for New, Old, Mums-To-Be + Everything In Between | Canny Group
Mother’s Day is fast approaching and is a day of celebration for many. It can also act as a reminder for us to stop, take a minute and think about whether our estate planning is in order. While it’s not something that you would typically wrap in a beautiful wrapping paper and put a big bow on to give your mother on Mother’s Day it is one of the most important conversations you can have with your loved ones.
Whether you are planning a pregnancy, are a first-time mum or are fully cemented in your role as a mother, it is always necessary to have firm instructions in place for your children, should something happen to you. If this is not done, your children can be left in a situation of uncertainty in an already difficult time.
Estate Planning looks at several important elements, including;
- Binding Death Benefit Nominations
- Business Structures
- Family Trusts
- Life Insurance
- Powers of Attorney
Powers of Attorney are documents used to appoint a person to represent you while you are alive, but lack the capacity to make decisions for yourself. They are critical documents for estate planning. We will discuss these in more detail below.
Broadly, the process of estate planning involves looking at your personal circumstances and trying, as best you can, to anticipate what will happen during your lifetime and gifting assets accordingly. Estate Planning needs to be regularly reviewed, especially if your circumstances change.
What is a Will?
A Will is a legal document that directs your assets to be dealt with in a particular way after your death. Without a Will, the law determines who will receive your estate, and in what proportions. This can cause many unanticipated issues and anxiety for your family.
- Appointment of Executors
The first decision that needs to be made when making a Will is who your executor will be. An executor is the person who is responsible for administering your estate in accordance with your Will. An executor may or may not also be a beneficiary. In a perfect world, an executor would be a close family member or friend and have knowledge of your affairs. However, this cannot always be the case. No matter who you choose, your solicitor would work closely with your executor to ensure that your wishes are followed.
- Disposal of Assets
The second decision that you need to make is who will receive your assets (money, property, jewellery for example) when you die. Examples of beneficiaries are your spouse, children or close family members. Everyone’s personal circumstances are different, and therefore no individual’s estate planning will be the same.
- Superannuation + Binding Death Benefit Nominations
Superannuation can be a complex part of estate planning, depending on your personal circumstances and whether you have an industry fund or a Self-Managed Super Fund (SMSF).
An important element of superannuation that tends to surprise people that superannuation, whether in an industry fund or a self-managed super fund, does not form part of your Estate unless you direct it to, and, depending on your needs, one will be preferable over the other. Legislation governs that, if nominating individuals, they must be classified as a dependent according to Superannuation Law.
A dependent is:
- Your spouse (including a de facto spouse);
- Your children (including an adult child, an adopted child and a step-child);
- Anyone who is fully dependant on you at the time of your death; or
- Anyone with whom you have an interdependency relationship with at the time of your death
If you do not have anyone who falls within the above categories, you need to nominate your Estate. If you do this, your Will will then govern who receives your superannuation. You may also choose to nominate your Estate if you have individuals who fall within these categories for various reasons.
- Appointing a Legal Guardian
When young children are involved, nominating a guardian is an important part of your Estate Planning. Appointing a guardian, and therefore expressing your wishes in relation to who has the ultimate care of your child/children, gives important direction to not only your family, but also the Family Court, in relation to the care of your children.
It is important to understand, however, that the appointment of a guardian in your Will is not binding, it is an expression of your wishes that could ultimately be overturned by the Family Court. While this can be a somewhat unnerving part of your Estate Planning, unless there is a dispute within your family about who cares for the children, it is unlikely that they would not follow your wishes – unless the person you appointed is found to be unfit or inappropriate to be appointed as a guardian. It is sometimes a good idea to write a letter to the Family Court, to be read in the event of your death, outlining the reasons why you have chosen the person or persons as guardians.
Revocation of a Will
As previously discussed, it is important to review your Estate Planning (your Will in particular) regularly, especially if your circumstances change. Many people are unaware that your Will is revoked upon marriage, unless specifically stated otherwise.
Divorce also revokes a Will. On the flip side, separation does not revoke a Will, so any gifts to your former spouse or partner are still valid, unless you have specifically excluded your former spouse or partner. New relationships may also give rise to the need for changes to your Will.
Power of Attorney
To put it nicely, if you think you need a Will – you probably also need a Power of Attorney.
Your Will comes into place when you die, whereas the Power of Attorney only operates whilst you are alive. Powers of Attorney enables another person to make decisions on your behalf. It is called an Enduring Power of Attorney because the appointment endures beyond capacity.
The purpose of the Power of Attorney is not to take away your ability to make your own decisions but to enable you to decide who can make decisions for you in case you lose capacity to make decisions on your own (being in a coma for example).
- Who Should You Appoint?
Powers of Attorney’s are powerful documents and you should only appoint someone you trust implicitly. You should also remember that you can change your Powers of Attorney at any time if your circumstances change. Therefore, whilst you should always think carefully about who you appoint, the decision can always be subject to change.
- Types of Powers of Attorney
There are a number of different Powers of Attorney. The main ones being the Enduring Power of Attorney (Financial and Personal) and the Medical Treatment Decision Maker (previously known as the Medical Power of Attorney).
The Enduring Power of Attorney encompasses two areas:
- Financial Power of Attorney; which allows the person you appoint to make decisions for your regarding your finances, such as signing documents to sell/buy a home, access bank accounts to pay bills (including accommodation bond), speak to everyday providers such as gas and electricity and make general finance decisions. It does have some limitations but generally the Power of Attorney operates to make your life easier. The power can commence immediately, or only when you cannot make decisions for yourself. Often, you want the power to only start on incapacity. However, if you need someone to act for you while on holidays, for example, it may start immediately.
- Personal Power of Attorney; which allows the person you appoint to make decisions about your lifestyle such as where you live, who you live with, dental care and general guardianship powers. In practice, many people make a Power of Attorney so that they have someone who can make decisions for them when they are too old to make these themselves (for example, moving into a nursing home or supported care accommodation).
We would recommend that you make a Medical Power of Attorney so that it is clear who you would like appointed to make decisions in relation to your medical treatment. If you have not appointed a Medical Decision Maker, the relevant legislation provides one for you as followed;
- Spouse or domestic partner;
- Primary carer;
- Adult child;
- Parent; or an
- Adult Sibling
- Who Can You Appoint?
They must be over the age of 18 years old and have not been convicted of an offence involving dishonesty. The attorney needs to accept their role as Power of Attorney by signing a Statement of Acceptance which must be witnessed in front of a lawyer or a person authorised to witness affidavits.
When it comes to Mother’s Day and celebrating the beautiful people that mother’s are to us, the last thing that we want to be thinking about is the time that they are no longer going to be with us but if your mother’s wishes are not laid out and known to those that love her in a legal binding document it is going to cause more heartache during a time of grief.
Canny Legal are experts when it comes to legal advice and we have a team of solicitors that can help you through the process. For Mother’s Day this year – why not consider having a conversation with your mum, step-mum, aunt, significant other if they have updated their Estate Planning recently to make sure that there is no extra stress in a time of need.
Get in touch today to find out how our team can help you, have peace of mind this Mother’s Day.