Money and Life
(Financial Planning Association of Australia)
In 2020 COVID-19 has introduced significant health risks and changes to family life. It’s now more important to have an estate plan so you can make sure your family and loved ones are looked after should you become ill or die.
It’s no wonder people tend to avoid making a Will. We can find it hard to face the fact that death is part of our future and that there may be a time when we won’t be able to manage our own finances due to poor health. However, the COVID-19 pandemic has made us all more aware of how life can change when we least expect it and our health is something we shouldn’t take for granted. So there really is no better time than now to get your estate plan in order.
What is an estate plan?
Your estate plan is a set of arrangements that sets out what will happen to your assets when you die and/or if you become unable to manage your own affairs. Your Will is just one part of your estate plan. It can also include a Power of Attorney arrangement giving someone else legal authority to manage your assets and finances if you become incapable of doing this yourself.
How do I make a Will?
You can take a DIY approach to making a Will with a Will kit. But not all your assets are covered in your Will. You super, for example is not an estate asset and you will need to make a separate arrangement – usually a binding nomination – to make sure your super death benefit is passed on according to your wishes.
Wills and estate plans can be fairly simple, but it depends on your particular family and financial situation. Owning a business, being married more than once or having children are just some circumstances that can demand a more complex estate plan. While it may take a lot more detail and structure to ensure all your assets are properly distributed, it’s worth doing to take care of everything that matters to you.
One of the best ways to make sure your estate plan covers everything it should, is to seek advice from a financial planning professional and a solicitor who specialises in estate planning. A financial planner can offer you guidance on growing and protecting your assets during your lifetime. They can also talk to you about what to consider as you decide how you want your assets to be distributed among your family and loved ones, both before and after you die. This includes the tax consequences of transferring assets to your beneficiaries.
However, a financial planner cannot offer legal advice on your estate plan and they cannot draw up the legal documents you need to make sure your Will and estate plan are legal and binding. You’ll need to work with your solicitor or an organisation that specialises in estate planning.
COVID-19 and your estate plan
Each State and Territory has their own legislation that lays out how estate planning documents must be signed and witnessed. Your solicitor will be able to guide you through this process so that your Will can be considered valid in a court of law.
With social distancing and other restrictions in place due to COVID-19, it can be more difficult to make these arrangements for signing and witnessing your Will and other estate planning documents. In Queensland, New South Wales and Victoria, new legislation has been introduced to allow certain legal documents to be signed and witnessed via video conference. Your solicitor can get you up to speed on the details of this process and let you know what software and devices you’ll need to complete remote signing and witnessing to meet these legislative requirements.
This legislation does not allow you to have a binding nomination for your super death benefit witnessed via video conference. To make arrangements for this part of your estate plan, you’ll need to get in touch with your super fund and check their requirements for making a valid binding nomination.
Do I need a Power of Attorney?
Under the new legislation for New South Wales, Queensland and Victoria, Power of Attorney arrangements can also be witnessed remotely via video conference. There are different types of Powers of Attorney you can nominate, but the two main ones are a Medical Power of Attorney (also known as a guardianship) and an Enduring Power of Attorney. As you might expect, a Medical Power of Attorney gives another person authority to make decisions about your medical treatment if you’re not physically or mentally able to choose for yourself. An Enduring Power of Attorney (PoA), on the other hand, gives someone the legal authority to manage your financial affairs when you’re unable to do so.
As you grow older, having a PoA organised is important in case you lose capacity to make decisions about your finances. If this were to happen and you don’t have someone legally appointed to act on your behalf, your financial affairs and your personal wellbeing could both be affected. If you don’t have PoA arrangements in place with a trusted friend or family member, it can make it difficult for things to be done on your behalf such as paying your bills or looking after your home.
In choosing the people or persons to nominate as your PoA, it should be someone you can trust to act in your best interests. And it also helps if they have some experience with finances and good knowledge of your assets so they can fully understand the consequences and results of any decisions or actions they take. In many cases, attorneys are family members – parents, siblings, children or grandchildren – as they are often the ones who know best how we ourselves would think or act.
With the current restrictions in place for interstate travel, having a friend or relative in a different state as an Attorney may no longer be a practical option. So if you are choosing someone as a PoA or making changes to to your PoA arrangements, it’s worth thinking about having someone nearby to act on your behalf if you should become ill or lose capacity to manage your own affairs.
What happens if I don’t have a Will?
If you die without a Will, your assets will be distributed according to the intestacy legislation for your State or Territory. Assets will be shared among family members according to these legal requirements. This is why it’s important to have a Will to make sure that your estate is passed on according to your wishes.