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  • Sally Davies

Demystifying "Estate Planning"


When you hear the words “estate planning”, you automatically think of Wills. Whilst a Will is extremely important, there are other documents that you should also consider as part of a comprehensive estate planning strategy that operate whilst you are still alive. These document names are often tossed about with little explanation, so to help de-mystify the arena, here’s a brief overview of the four main estate planning documents:

1. Will

This document outlines what you want to have happen with your assets after you pass away. In your Will you appoint an executor (someone to manage the estate), a trustee (someone to manage any trusts you establish in the will, for instance for minor beneficiaries), and outline how you want your assets to be distributed, including naming the beneficiaries (who you want your assets to pass to).

You will often hear the words “Testamentary Trust” mentioned these days too. In simple terms, these are just trusts that are set up under a will. In reality, they are quite complex documents that are designed to provide a greater level of control over asset distribution to beneficiaries. There are a variety of benefits for having a testamentary trust established under a Will (including possible protection from an inheritance being captured by bankruptcy proceedings), however these benefits vary on a case by case basis.

2. Death Benefit Nomination

Superannuation is quirky compared to other assets in that the funds are held outside of your other estate assets and do not automatically pass in accordance with your will. The trustee of your superannuation fund also has a discretionary power to determine which of your dependents receive your super.

You can remove this uncertainty through preparation of a Death Benefit Nomination (DBN) form, which states how you want your super to be distributed after you pass away. The super fund trustees can then use the DBN to make a decision in relation to the distribution of funds.

Depending on what your fund will allow, nominations can be binding (the trustee must follow your request) or non-binding (the trustee takes your request into account in their decision). There are strict rules in place in relation to DBN forms, so care needs to be taken when they are completed to ensure that they are legal.

3. Power of Attorney

Under this document you appoint somebody to act on your behalf in relation to financial matters.

You can appoint one or more people, and they can act jointly, independently or by majority (eg. two out of three).

You can place controls over when the document comes into effect, including immediately, for a set period of time (for example, if you are going away on holidays), or when you lose capacity. You can also place limits on what the document is used for, for example, to access bank accounts but not to sell real estate.

An Enduring Power of Attorney will continue to operate if you lose capacity, while a General Power of Attorney will only operate whilst you still have capacity.

4. Appointment of Enduring Guardian

Under this document you appoint a person to act as your guardian to make medical and care decisions on your behalf if you are no longer able to make those decisions yourself. This can include in relation to decisions about where you live, the type of health care you receive, and consenting to medical and dental treatment on your behalf.

As with a Power of Attorney, you can appoint one or more people, and they can act jointly, independently or by majority (eg. two out of three).

You can also include limitations in the document as to what your guardian has the power to do (for example, they can make decisions about what medical treatment you receive, but not in relation to your accommodation).

The above documents all have the potential to give people great power over your financial and health care matters, so it is integral that you obtain legal advice before entering into them.

For assistance and advice on your estate planning, please contact the team at Jenkins Legal Services.

#EstatePlanning #Wills #PowerofAttorney #EnduringGuardian #executor #testamentarytust

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