As the world watches an increasingly frail Queen Elizabeth II, talk has inevitably turned to what happens after she passes away. She’s made clear her wishes regarding her succession and, it’s safe to assume, has water-tight estate planning in place. As the monarch, she also has Counsellors of State who are basically her Powers of Attorney.
And what’s our point?
Well, with the Royal Family currently plagued by drama and scandal, imagine if Her Majesty did not have a sound succession plan, exquisite estate planning and Letters Patent to protect everything she’s worked hard to keep intact for the next generation?
Now, imagine if they were your family.
If that thought filled you with existential dread, let’s start chatting about estate planning, Power of Attorney and why you need to get this sorted ASAP.
What do we mean by 'getting your legal affairs in order'?
If you have an estate (and if you own anything of value, you have an estate) or own any type of business, you should have your legal affairs in order. This usually means:
- having a legal will drawn up and correctly notarised will
- designate a Power of Attorney – be sure to choose the correct Power of Attorney for your needs.
- nominate a beneficiary/s for your superannuation, insurance etc
- organise legal and financial paperwork.
- ensure your Power of Attorney/s and/or beneficiaries know they’ve been selected for their roles and that they’re comfortable with what may be expected of them.
Depending on your personal and business circumstances, there may be other legal paperwork that need to be addressed. This is why it’s important both your lawyers and accountants work together when it comes to your estate planning.
What's a Power of Attorney?
A Power of Attorney is a legal document giving a person, trustee or organisation the legal authority to act on your behalf. It allows them to manage your assets and make financial and legal decisions if you’re unable to do so.
There’s two types of Power of Attorney documents. While they seem similar, they’re very different and why you should always seek legal advice when drawing up a Power of Attorney.
The NSW Trustee and Guardian site explains:
Enduring Power of Attorney - A legal document that allows you to appoint a person(s) to manage financial and legal decisions on your behalf and continues even if you lose the ability to make decisions for yourself.
General Power of Attorney - A legal document that allows you to appoint a person(s) to manage financial and legal decisions on your behalf, only while you have the ability to make your own decisions.’
What can a Power of Attorney do?
Back to the NSW Trustee and Guardian site:
‘You can use a Power of Attorney for almost any financial purpose including:
- signing legally binding documents
- operating bank accounts
- paying bills
- buying and selling real estate
- managing investments
- collecting rent.
In NSW, an attorney can only make financial and legal decisions.’
What's estate planning?
While nobody wants to think about dying or being incapacitated and unable to make decisions for yourself, planning ahead can spare your family and business partners the burden of trying to figure out what you would want them to do.
According to MoneySmart:
‘An estate plan records what you want done with your assets after your death. It can include documents such as:
- your will
- a testamentary trust (as part of your will)
- superannuation binding nominations
It also covers how you want to be cared for — medically and financially — if you can no longer make your own decisions. This part of your estate plan may be in documents such as:
- any powers of attorney
- a power of guardianship (giving someone the right to choose where you live and to make decisions about your medical care)
- an advance healthcare directive (your needs, values and preferences for your future care)
The documents you choose will depend on your situation and what you're comfortable to trust others with. Get legal advice if you're not sure.
You must be over 18 and mentally competent when you draw up your estate plan.’
Although estate planning is for everyone, if you do have significant wealth, or wish to have your assets disposed of charitably, preserving both your wishes and wealth means a carefully developed estate plan is a must.
Is a Will the same as estate planning?
Having a legal Will is the bare minimum anyone with an estate should have in place. A will allows you to choose how you want your assets – including money, property, investments and even family treasures – allocated.
MoneySmart tells us a will is:
‘.. a legal document stating what you want to happen to your assets when you die. It is part (but not all) of your estate plan.
Your will can cover things like:
- how you want your assets shared
- who will look after your children if they're still young
- any trusts you want to set up
- how much money you'd like to give to charities
- plans for your funeral.’
What happens if you don't have a Will?
Dying without a will means you die ‘intestate’. The law now decides who gets your money and assets, and they’ll be distributed according to the rules of intestacy. If you have no direct heirs, any surviving relatives may be next in line.
Even worse, if you don’t have surviving relatives closer than a first cousin, the government gets your money. Yikes!
Estate planning, drawing up a Will or appointing a Power of Attorney shouldn’t be left to chance. Talking with financial professionals who can work with your lawyers or solicitors to plan your estate the way you wish, will give you peace of mind.