We all want to protect the people we love, so it’s no wonder we shy away from tough conversations. Death and becoming incapacitated are two of the most difficult subjects of all, yet talking about what your parents, partner or family wants before something unexpected happens, is one of the most thoughtful things we can do for the people we care about.
Imagine if you were to die unexpectedly or become temporarily or permanently incapacitated due to an illness or injury, leaving your family with no idea of your wishes. They could find themselves trying to guess what you would have chosen for everything - from your ongoing care or funeral arrangements to your financial obligations and the distribution of your estate. This is why it pays to ask your loved ones two important questions:
1. Do you have a will?
2. Do you have an enduring power of attorney?
It takes a few legal documents to make their preferences crystal clear. These include a will to take care of what happens when they pass away and an enduring power of attorney to take care of themselves in their lifetime. These can help the whole family feel more comfortable about the future. Isn’t that something you should talk about?
If someone you love dies intestate (the legal term for not having a valid will) everything they own, including their personal belongings, will be distributed according to legislation. There will be no way of minimising costs and taxes, so the people they care about most could lose out financially. And if they are not the legal next of kin, their loved ones could end up with nothing at all.
It’s a tough conversation to have, but an important one, as a will can take into account all of the practical details you need to know, such as:
their assets, including bank accounts, insurance policies, investments, property, business interests and any trusts already established, or those that need to be established after their death
how they would like these assets to be divided
their preferred funeral arrangements
A will isn’t just a question for older family members either.
“Young people often have far more assets than they realise thanks to superannuation, and possibly life insurance too,” Anna Hacker, National Manager Estate Planning at Australian Unity Trustees Limited says. “I think it’s a good idea to make a will as soon as you start earning money.” If you’re in this age group, let your parents, partner, or a sibling know that you have done so.
If your loved one does have a will, it’s important to probe a little further.
A commonly asked question is why should I pay someone to draft a will for me when I can easily access online “do-it-yourself” options as well as will kits from your local newsagent?
“While I would never recommend a DIY will kit from the newsagent, an online do-it-yourself will can work perfectly well if there are no complications. It is important for people to understand though, that for most of us, the right advice can make a big difference to the outcome,” Anna says.
“For example, I’ve seen parents who were desperate to provide for their disabled son inadvertently cut off his Centrelink entitlements. If you don’t fully understand how the process works, there’s a danger that doing what appears to be the right thing could actually make things worse.”
Anna normally encourages her clients to discuss their needs in person, although during restrictions imposed by COVID-19 and in other times when a person can’t meet physically, the meetings have been held by videoconference.
“We can always find a way to make sure their wishes are safely recorded.”
A valid will must also name an executor — the person they want to carry out their wishes.
“Many people appoint their partner or an adult child, and this is absolutely fine where everything is simple and straightforward,” Anna says.
“But if there is any complexity, such as blended families, conflict between siblings, or in the structures of the estate itself, the role can be very challenging for someone with no knowledge of the law, tax or accounting. Their inexperience could also cost an estate a great deal of money. Independent professionals, such as trustee companies, can relieve that pressure and help save money in the long run.”
Anna also recommends reviewing documents on a regular basis. “It definitely shouldn’t be a case of set and forget,” she says. “That doesn’t mean you have to make changes for the sake of it, but it’s a good idea to check every three to five years or so, so that your initial wishes still suit your circumstances and haven’t been affected by new legislation or changed objectives.”
A will helps others after your parent, partner or family member dies, but who will look out for your loved one while they’re still alive? It’s why you should find out if they have an enduring power of attorney, and what documentation they have in place.
“An enduring power of attorney is at least as important as a will,” Robert Goodridge, National Manager Estates and Trusts at Australian Unity, says. “It gives someone you trust the authority to manage your loved one’s assets and financial affairs if they’re unable to make decisions themselves.
It is important to note that there are other roles that can be appointed in a will. These roles can include medical decision makers and those responsible for looking after our day to day lifestyle decisions, such as where we live or who can visit us. This role is often called a “guardian” or “attorney” for personal matters.
A financial attorney will have the role of protecting your loved one’s assets and managing their investments so they can live as comfortably as possible throughout their life. Where a financial attorney is not nominated, a tribunal can appoint an administrator to fulfil this function.
“The financial attorney can be an individual, such as a family member, or a trustee company,” Robert says.
“As with a will, it’s a matter of complexity. Unless you have very simple structures in place, you really need someone with the skills and experience to meet strict ongoing legal and fiduciary responsibilities.”
You also need to trust the financial attorney to be completely impartial, and to have your loved one’s best interests at heart.
“Our job as a financial attorney is to balance their immediate needs with their likely requirements for the future,” Robert says. “And, of course, once their assets are in our care, there’s no danger of financial abuse”.
Beyond the legalities and technicalities, a will and an enduring power of attorney help to satisfy our human need for a secure future, which is why we should initiate that discussion and ask the tough questions of the ones we love.
“In my experience the real benefit of planning ahead is reassurance,” Robert says. “We all want to know that, whatever happens, the people we love will be okay.”
