Estate planning is crucial for anyone who wants to ensure their assets are effectively managed during their life and after death. But there are many components to estate planning, and the process itself is complex and requires significant support from qualified lawyers.
Wills, Powers of Attorney and Advance Directives are three common estate planning tools. However, they all serve different purposes, so let’s explore each one’s unique features.
A Will is a legal document in which the Will-maker, known as a testator, sets out their wishes regarding the distribution of their assets for when they die. In addition, Wills are also used for:
- Nominating guardians for children.
- Setting up testamentary trusts.
- Organising funeral arrangements.
- Selecting executors to manage estate duties.
Testators use some of these functions more frequently than others. For example, almost all people utilise Wills to distribute assets, while just 17 per cent set up testamentary trusts, according to research from the University of Queensland (UQ) and other academic institutions.
2. Powers of Attorney
A Power of Attorney is the process by which one person (the principal) appoints someone they trust (the agent) as a legal proxy to make decisions on their behalf.
There are generally two types of Powers of Attorney: general and enduring. General Powers of Attorney can make legal and financial decisions for the principal, but this is usually only for a specified timeframe. A good example is when someone is overseas and can’t handle their finances at home.
An Enduring Power of Attorney provides the agent with decision-making authority if the principal becomes incapacitated, such as after an accident or due to dementia. They retain this control, which may include medical and health care decisions, until the principal has recovered.
3. Advance Directives
Not everyone feels comfortable leaving the heavy burden of major health care decisions on the shoulders of their loved ones. Advance Directives, often described as living Wills, enable individuals to establish their preferences for future care ahead of time.
An Advance Directive only comes into effect when the individual becomes incapacitated and it allows the refusal of medical treatments or resuscitation efforts.
Advanced Directives are less common than Wills and Powers of Attorney, with the UQ research indicating only 14 per cent of people complete one. Furthermore, NSW has no statutory laws relating to Advance Directives, but the state’s courts do recognise them as valid.
Would you like to discuss Wills and estate planning in NSW with a seasoned professional? Please contact Gerard Malouf & Partners Will Dispute Lawyers today.