Estate Planning

Estate Planning is one of those things that most people dread doing. It seems overwhelming and difficult, but it’s a job that needs to be done. I like to think of it as getting organised while you are alive, so there is no chaos after your death. It’s also how you make things smooth for your loved ones and recognise and honour those left behind. It’s like an instruction book of your wishes.

The best way you can help your family after your death is by being organised NOW! You will need to consult with your lawyer or appoint one to do this. If you don’t have one, ask family or trusted friends for a recommendation.

Estate Planning involves the completion of the following elements;

  1. Enduring Power of Attorney
  2. Will
  3. Executors Dossier
  4. Memorandum of Wishes

Enduring Power of Attorney

This is a document in which you can choose to give a person the power to make decisions on your behalf regarding personal and or health matters and financial matters. The enduring part refers to the fact that this power continues even when you are no longer competent to make the decisions yourself.

A Power of Attorney is different to an Enduring Power of Attorney. A Power of Attorney simply authorises someone to sign documents and make decisions on your behalf. A Power of Attorney ends if you loose the capacity to make decisions for yourself.

Your lawyer will help you navigate the differences to you, and help you decide which version you require and if you should put a time frame against it.

For example, I have given my Enduring Power of Attorney for my personal, health and financial matters to my sister, to be invoked only when I loose the capacity to make decisions for myself. Because she has this power, I have chosen to also make her the Executor of my Estate and she also has copies of my Advanced Care Planning Directive. This ensures she is fully aware of all of my wishes in respect to every aspect of my life.

Executors Dossier

Your lawyer will provide you a copy of this document for you to take home and fill out and return. There’s quite a lot of information to complete. It takes time, but completing it helps the executor of your will understand all of the components of your estate and where to find important documents. This document must be stored with your will. Sections can include, but are not limited to:

  • Personal details
  • Details of marriage, family and Children
  • Funeral Arrangements
  • Who to notify at time of death
  • Location of Will
  • Details of Lawyers, Accountant and Financial Advisors
  • Detailed listing and breakdown of assets
  • Insurance Policies
  • Digital Information- passwords.
  • Estate Liquidity Worksheet
  • Power of Attorney

Your Will

Your will is a document which outlines how you want your personal property and financial assets to be distributed upon your death. It also outlines the guardianship of your children, aged 18 years and under. The major components include:

  1. Executor/Trustee identification
  2. Guardianship
  3. Personal Property
  4. Instructions

Executor/Trustee

Quite simply, this is the person in charge of the will at the time of your death. It is the person who you assign responsibility to ensure that all your wishes are followed up on, and that your life is tidied up financially and legally. It’s a big job, so choose wisely.  You can choose to have one person (sole) or two (joint).

You also need to appoint a person who is authorised to act on their behalf if your original executor is unwilling or unable to do so.

Guardian of Children

If you die and your children are under 18 who will look after them? This is not something that you can decide alone. You must consider the legal rights of the children’s other parent. If you are survived by the other parent of the children, then that person automatically is legally entitled to the care of the children. If unfortunately that person has also died, then you need to discuss with, and appoint someone to look after your children and formally include this in your will. It’s not something that you can spring upon anyone. You need to initiate a discussion with that person/s and let them have time to think about it. They will need to think about the financial and emotional implications of bringing up your children as their own.

PERSONAL Property

This is defined as

  1. Household chattels
  2. Motor Vehicles and Boats
  3. Clothing, jewellery, watches and other items of personal adornment

Dividing up your personal property can be a tough. You can have two approaches- get an excel spread sheet and list the specific items you would like to give to each person and keep a copy with your will or, do as I have done and trust your children. (You can include any specific wishes in your Memorandum of Wishes).

I think the most sensible approach is to give people sentimental gifts whilst you are still alive. Don’t give people the opportunity to fight over things. Let them all feel valued and loved, even if they have provided you with trouble in your lifetime. It’s your way of acknowledging the role they had in your life and leaving them with fond recollections of you.

I have the following clause in my will.

‘I give my Personal Property to my children to be distributed among them as they agree, but if they have not attained an age to be able to, or cannot agree within three months of the date of my death, then I direct that my Trustee should distribute those assets among my children so that the total value of the assets distributed to them will (as nearly as possible) be equal.’

Instructions

This section outlines specific execution instructions in relation to the financial aspects of your will. It outlines the powers that you assign to the trustee. Importantly if you have young children this section will outline how your trustee is to deal with the non personal property aspects. For example are they to be put into a trust until your children reach a certain age? Only you can decide what approach is the best. Your lawyer and financial advisor can work as a team to guide you on this.

Memorandum of Wishes

This is the document where you list specific wishes in relation to the various sections of your will. For example, if you wish to prioritise the payment of your children’s education out of your estate, this is listed here.

Life Insurance/ Superannuation and Total Death and Permanent Disability

In my opinion, you cannot consider your estate planning unless you have spoken with a financial planner and worked out your Life Insurance requirements. What would it cost for your family to live without you if you died suddenly? Think about childcare, household management and other jobs that you naturally do. How much would it cost your family to have someone do the things that you do for them?

TPD insurance covers your family for the expenses that would arise if you become irreversibly incapacitated as a result of disease or accident, like my friend Stephanie. Luckily for her family, she had TPD insurance and they were able to cover the medical expenses required after her accident and cover for the costs of keeping her alive now that she is no longer able to function in the same capacity as previously.