Estate Planning Myths Series: “I don’t need to make a Power of Attorney because my spouse can automatically act”

An Enduring Power of Attorney appoints an “Attorney” to act on your behalf in relation to the administration of your affairs at a time of your choosing, including following your incapacity.

Such appointment can be made in relation to both financial and personal/health matters. Should no such document exists upon your incapacity, there are various courses of action that can be taken in relation to the appointment of persons to act for you.

Personal and Health Matters

Pursuant to section 63 of the Powers of Attorney Act 1998 (Qld) (the Act), your spouse (if the relationship is close and continuing) is considered as the statutory health attorney, and can make any decision about the health matter that the Principal could lawfully make if they had capacity (in accordance with section 62 of the Act).

In the event your spouse is unable or unwilling to act, the Act provides alternate appointments and an application can be made to the Queensland Civil and Administrative Tribunal (QCAT) for recognition of same.

Financial Matters

QCAT can appoint a person to act as a Guardian for a person only if they are satisfied that the adult for whom the Guardian is appointed (the Principal) has impaired decision making capacity and that a decision maker is needed to ensure the Principal’s needs are met and protected.

Anyone who has a genuine and continuing interest in the welfare of the Principal can apply for appointment as the Guardian for such person. This power is not necessarily automatically given to your spouse.

Although there are provisions by which a health and finance attorney can be appointed to act on your behalf, this can be a lengthy and costly process and, in the event of your incapacity, can add additional stress to those persons already concerns for your welfare.

Further, a document specifically prepared by you which appoints your preferred Attorneys can provide additional instructions to such Attorneys (which instructions, if the Court were to make, would require additional processes and orders – some of which simply may not be possible). For example, in the event that you required your Attorney to deal with jointly held property or to make a nomination (binding or non-binding) to your superannuation trustee in relation to the payment of your member interests. As such terms can be important to the smooth and effective administration of your Estate, it is important to consider the drafting of a detailed Power of Attorney.

If you would like to discuss the drafting of your Enduring Power of Attorney, please contact Caitlin Bampton on 07 5574 3560 or via email to Caitlin@nautiluslaw.com.au.

Estate Planning Myths Series: “I made my Will years ago – I don’t need to do a new one”

You drafted a Will years ago – it’s pretty basic, but it gives everything to your spouse, or, if your spouse doesn’t survive, then everything goes to your children. So, if the content of the Will applies, what is the point of doing a new Will that sets out the same wishes?

Many people see the updating of a Will as an unnecessary and costly exercise, particularly when the new Will contains the same directions as the prior Will.

Although we certainly understand the frustration with the process, there are three important reasons to ensure your Will is reviewed and updated regularly.

Firstly – a regular review of your Will is critical

There have been recent cases in Queensland that indicate that if a challenge is made against the Estate of a deceased person, and the Estate is being administered by a Will that was not recently made or reviewed, the Courts often question whether the wishes of the deceased at their date of death were the same as those contained in the Will.

There is good reason for this. We regularly hear “I’ve been meaning to update my Will for months now, especially since this happened” – life is busy, and updating a Will falls a long way down the to-do list for most people.

However, it is important to make time for the review process – attending on your solicitor to review the Will, make any alterations, or confirm your wishes can clarify your intentions for the administration of your Estate and potentially prevent an Estate challenge. There is no defined review period, however we recommend reviewing your documents with your solicitor at least every three years.

Secondly – legislation and case law changes regularly – your documents need to change with it

Legislation and Case Law in each State is constantly evolving, meaning that the way your Will is interpreted or effected may change over time.

It is important to review, and confirm or vary, your Estate planning documents with your solicitor regularly to ensure that there are no material changes to your Estate plan that result from changes in law.

Finally – has your Will been voided or revoked?

While a regular review of your Estate planning documents is important, there are certain circumstances which will void your Will – therefore, review is critical should any such occasion occur.

Marriage, for example, will revoke a Will. Unless your Will is made in contemplation of your marriage to your partner, the act of marrying will invalidate the Will.

Similarly, divorce or annulment will also revoke your Will (unless a contrary intention is specifically indicated).

It is also important to review your Will as the circumstances of yourself, your executors or your beneficiaries change – if you, your executors or your beneficiaries become subject to bankruptcy or family law proceedings, it is important to review your Estate plan to ensure that it is still appropriate and, where necessary, that appropriate protective measures are set in place.

If you need to review your Estate plan, we welcome you to contact our Estate Planning Team on 07 5574 3560 or via email.

Estate Planning Myths Series: “I don’t have any assets, so I don’t need a Will”

It is a common phrase heard, particularly from young adults – “I don’t have any assets, so I don’t need a Will”.

Young adults and non-homeowners are often of the opinion that, because they do not have “significant” assets – they do not need a Will.  This article considers two of the most basic reasons to have a Will.

Firstly, everyone owns something – and the majority of young people have potentially significant superannuation death benefits.

Remember opening a “Dollarmites Club” account with Commonwealth Bank when you were in early primary school (or opening one for your children)?  At a young age you started to accumulate assets.

In addition to many young adults concluding that their assets are not significant enough to necessitate a Will, there is generally one asset that they do not consider – superannuation death benefit proceeds.

Superannuation is held by the Trustee of your superannuation fund(s) on your behalf.  Although you are beneficially entitled to the funds, they are not owned by you (but rather held for you).  Therefore, the Trustee can pay the superannuation death benefits as the Trustee determines – which may or may not be in keeping with your wishes.

If you die having a superannuation member interest, the Trustee is obligated to pay the death benefit to any one or more of your “dependents” or your legal personal representative – unless you have made a Binding Death Benefit Nomination (and the Nomination names a lawful payment direction).

You may have significant superannuation death benefits, and have no idea!  We discover this quite often, when we ask clients to provide copies of their superannuation statements.

For example, one standard cover by Sunsuper provides a combined total and disability cover for a 30 year old in the sum of $250,000, which decreases at age 60 to $25,000. Also, many industry funds have basic insurance coverage that is taken out on joining the superannuation fund.

In a Will, directions can be made in respect to your wishes on the payment of the superannuation death benefits.  The Trustee may have regard to your wishes contained in your Will, but is not bound to act in accordance with your Will. However, your Will is an excellent starting point for the Trustee to consider, in assessing how the superannuation death benefits should be paid.  Of course, making and maintaining a valid Binding Death Benefit Nomination in the form required of the Trustee is the best approach to ensuring the benefits are paid to the correct beneficiary.

You do need to be aware, however, that the Trustee is limited to who it can pay – including generally your parents, your children, your partner or spouse and your dependents and interdependents (in general terms – people whom you live with or whom rely on you for some level of financial assistance, or vice versa).  Excepting in respect to any one or more of these, the Trustee must pay the death benefit to the Legal Personal Representative of your Estate.

Assuming the death benefits are paid to the Legal Personal Representative of your Estate, if you have no Will – the superannuation death benefit will be distributed in accordance with the intestacy rules set out in your state of residency’s intestacy rules (see, for example, the Succession Act 1981 (Qld)).  But, you may not want to leave your death benefit to those who would take intestate, so it pays to draw a Will – regardless of the value you believe your Estate to be worth.

Secondly, if you do not have a Will, there is a question over who controls your Estate.

A properly drawn Will appoints an executor, which person (or people) has the authority to administer your Estate.

In the event that you die without a Will, the only way that a person can be granted authority to deal with your estate (in a way that is recognised by financial institutions and asset holders) is for that person to obtain a grant of Letters of Administration from the Supreme Court.

The cost and time involved in obtaining the grant of Letters of Administration is generally greater than that of obtaining Probate of a Will.

If you would like to speak to our estate planning team about drawing a Will, please contact our office on 07 5574 3560 or via email.

Estate Planning Myths Series: Nominal gifts prevent Estate claims – or do they?

“If I leave someone $1 under my Will, then they can’t make a claim against my Estate”.  This is a common misconception that is often encountered in the estate planning process for clients who wish to take all possible steps to ensure that a claim won’t be made against their deceased estate.

The Succession Act 1981 (Qld) provides, at Part 4, that the Court may consider an application made by a spouse, child (including stepchild or adopted child) or dependent where the deceased has not made adequate provision from the Estate for the claimant.  The Court will consider factors such as:-

  • The extent to which the claimant was being maintained and/or supported by the deceased;
  • The need for the continuance of such maintenance and/or support; and
  • The circumstances of the claimant and the Estate.

It is therefore not sufficient to leave a nominal gift for a potential beneficiary under your Will.  The Court’s consideration is not based on whether you have made any provision for the beneficiary, but rather that you have made adequate provision for the beneficiary.

If you are anticipating an Estate claim following your death, you should advise your lawyer of your concerns so that all necessary steps can be undertaken in the preparation of your Will and estate planning documents.  It may be appropriate to leave supporting estate planning documents setting out the circumstances under which you made your Will, and why you made provision for your beneficiaries (including, where appropriate, excluding beneficiaries).

The unfortunate reality is that there is no fail-safe method to prevent a claim against your Estate.  If you have concerns about a claim against your Estate, we strongly recommend discussing your concerns with our Estate Planning team to make sure that all appropriate steps are undertaken to ensure that your Estate Planning instruments are appropriately drafted to address and possibly pre-empt a potential claim.

Our Estate Planning team can be contacted on 07 5574 3560 or via email to caitlin@nautiluslaw.com.au.

Launch of the Nautilus Law Group “Estate Planning Myths” Series

When meeting with new clients for Estate Planning matters, we often encounter some interesting myths and misconceptions about the law and processes involved with Estate Planning.

Estate Planning and administration in Queensland is governed by the Succession Act 1981.  Documents drafted during estate planning can include a Will, a Power of Attorney for Finance and/or Personal/Health matters, and an Advance Health Directive (plus any other supporting documentation recommended by your lawyer).

Estate Planning can be a complex process, and the advice given to each client is individually tailored to their circumstances – the advice we give one client will often be entirely different to that given to another (as the clients may have different priorities in their Estate Plan, or the law applies to their individual circumstances in a different way).

Due to the misconception that Estate Planning is a “one size fits all” exercise, there are many myths (which often stem from tailored advice being misunderstood as general advice) which are becoming more widely known.

We are pleased to announce the launch of our “Estate Planning Myths” Series of articles on 7 March 2016, through which the lawyers of our Estate Planning team will address the truth behind some of the most common myths and misconceptions we hear.

 

What myths and misconceptions are you talking about?

While there are many Estate Planning myths, we will be addressing those that we most commonly hear.  These include:-

  1. Making a $1 gift to a person in my Will prevents them from making a claim against my Estate
  2. If I don’t make a Will, everything goes to the government
  3. “What’s the point of a Will? My Estate will get eaten up by death duties anyway!”
  4. “I don’t have any assets, so I don’t need a Will”
  5. “Anyone can challenge a Will – it’s not worth the paper it’s written on”
  6. “I don’t need to make a Will because my spouse will automatically receive everything”
  7. “I made my Will years ago and nothing has changed, so I don’t need to do a new one”
  8. “I don’t need a Power of Attorney because my spouse can automatically act”
  9. “My Executor won’t get any compensation for acting as Executor”
  10. “My Executor has to pay for the costs of administration of my Estate”.

 

Have you been told something about a Will, Power of Attorney, or Estate Planning generally, that you are not sure about?

The above indicated topics are those heard most often by our lawyers – but it is not an exhaustive list of the myths that circulate.

Is there something you think we have missed and would like us to reveal the truth of?  If so, please email Caitlin Bampton with your query.  Alternatively, if you would prefer to submit an anonymous query of an Estate Planning myth you have heard, please click here to complete our survey, and we will address the topic in future articles.