Estate Planning

Estate Planning

What is estate planning?

Estate planning involves managing the transition of wealth between generations. Estate planning helps to ensure that your property will go to the people you want it to go to, in the way you want it to, at the times you want it to. It may allow for substantial savings when dealing with taxes and legal fees and it helps your family and friends avoid the burden of the bureaucracy that may occur after the death of a loved one.

What is a Will?

Your Will is a legal document that directs how your estate assets are to be distributed amongst your nominated beneficiaries. You are required to nominate an Executor in your Will. The Executor has the duty of carrying out your wishes in your Will and is granted power to administer the estate. Here are four key issues to consider when establishing/reviewing a Will.

  • Who should you appoint as your beneficiaries?
  • What assets do you want your beneficiaries to receive?
  • Who should you appoint as your executor?
  • Should you establish a testamentary trust?

What is a Power of Attorney?

Granting a Power of Attorney means that you legally appoint a person or organisation to make decisions, sign documents and act on your behalf in various matters. A Power of Attorney generally ceases when you suffer a loss of mental capacity. This can be overcome by using an Enduring Power of Attorney which does not cease upon loss of mental capacity. An Enduring Power of Guardianship provides the power to make personal and lifestyle decisions for you should you lose mental capacity. It is important to note different states have different ways of dealing with medical and lifestyle decisions for a person mentally incapacitated.

Granting a Power of Attorney means you legally appoint a person, or organisation, to make decisions, sign documents and generally act on your behalf in various financial matters, such as:

  • collecting dividends, interest, rent and other sources of income
  • buying and selling assets
  • paying your accounts, and
  • preparing your tax return.

A Power of Attorney can be limited to a specific event, such as the sale of a property, or can be set up to cover a particular period.

Enduring Power of Attorney

One of the limitations of a Power of Attorney is it generally ceases when the person suffers a loss of mental capacity. This can be overcome with the use of an Enduring Power of Attorney. This type of Power of Attorney does not cease on mental incapacity and can therefore provide an important tool in estate planning.

Medical treatment and lifestyle decisions

It is important to note different states have different ways of dealing with medical and lifestyle decisions for a person who is mentally incapable of making such decisions.

Such methods may include:

  • Power of Attorney (medical treatment) – attorney has the power to give and in certain circumstances, withhold consent to medical treatment on your behalf
  • Enduring Guardianship – guardian has the power to make personal and lifestyle decisions for you should you lose mental capacity, including decisions as to where you live and who with
  • Enduring Power of Attorney – attorney has the power to act on your behalf during your life, in relation to your investments and other financial matters
  • Advance Health Directive – a document in which you can express your wishes about medical treatment and how you would like your body to be dealt with in the event of an accident.

As state based requirements differ, it is important to seek advice from an appropriately qualified legal professional on these and other issues when putting together your estate plan.

What is a Testamentary Trust?

A Testamentary Trust is a trust created pursuant to your Will. Testamentary Trusts may assist to distribute your estate to your beneficiaries in a more tax-effective manner and may reduce the likelihood of a successful challenge to your Will.

Estate Planning

Keeping your estate planning current will help ensure that your estate assets pass to the appropriate person at the appropriate time.

Taxation Minimised

A properly executed Will ensures that after your death taxation can be minimised wherever possible, assets will be distributed according to your wishes and funds are held in trust for beneficiaries where appropriate.

Power of Attorney

An Enduring Power of Attorney will enable your financial affairs to be handled efficiently in the event of incapacity.