Estate Planning is more than Wills

But I just need a Will?  

Doing a Will is easy, right?  You just go and see a lawyer and fill out some paperwork.  While a Will is a great starting point it is only part of the picture.  There are many things that are not covered by ‘just a Will’ including what happens if you lose capacity temporarily, but you are still alive?  How will you fund your medical care as you get older?  What are your choices around superannuation and insurance, did you know that you cannot sign a nomination leaving it to your parents?  Did you know that the nature of your nomination impacts how quickly your family receives your superannuation, and any associated life insurance?  What is a testamentary trust, what benefits would it give to your family?  Some of these decisions require legal advice, some require financial advice, and some require both.  All of them require more than ‘just a Will’. Most importantly, the list of questions that you need to answer when you are creating a comprehensive Estate Plan is long.  If you prepare your documents with us then we will not dump a long list of questions on you and send you off to do your “homework”, we will work through this together.  

The problem with just a Will  

Most people who we speak to think that a Will works like this graph below.  Most people understand a Will as a bucket, you put everything into the bucket, and you give the bucket to the Executor.    

The problem is that, in practice, an Estate is far more complex than that.  

There are things that fall outside of the Will bucket, including superannuation, insurances, and some real estate.  You can direct superannuation, insurance or real estate into your Estate, but you cannot do that by putting a clause in your Will, you need to do a separate set of documents to make that happen.  There are also many things that are not controlled by a Will, but the Executor has to deal with by virtue of the fact that the Will appointed them as the Executor, things like tax returns, funerals and locating all of the assets.   The above graphic doesn’t mention everything, for instance it doesn’t mention Probate, because not all Estates require Probate.  This graphic applies to a “simple” situation where the preferred beneficiary inherits everything in their own name.    

Making decisions around your health 

 The biggest category that falls outside of your Will however is making decisions about your health.  Providing for yourself, if you lose capacity, is not as simple as signing a Power of Attorney.   

Both death and getting older are a certainty, and while people are happy to plan for their retirement they don’t like to think about their aged care.  In the 20182019 financial year 1.3 million Australians accessed some form of aged care.  This is institutional assistance, not assistance delivered by a family member or friend.  In June 2019 we had approximately 4 million Australians aged 65 and over.  That is a large percentage of this population accessing institutional assistance.    

It is probably obvious but the longer that we live the more likely it is that we will need care.  Often families leave decisions about aged care until the last minute, and this can cause problems such as –  

● The person needing care has reduced physical or mental capacity, and this reduces their funding options if assets are in their name.  

● An asset needs to be sold but then spent on different people, for instance the person needing care and the spouse, or the person needing care and an adult child, but the Power of Attorney does not allow assets to be given away like this.  

● The person needing care left strong directives about what they want but doesn’t have the funding to make that happen.  

These decisions around aged care are mostly not legal decisions but a combination of financial and personal decisions. A lawyer can assist with a Power of Attorney and the document appointing your medical decision maker, and these are important documents, but they are only part of the picture.  You also need to commit your financial plan to writing, preferably in the Letter of Wishes document that we will prepare as part of your estate plan, so that your family don’t tie themselves into knots or argue about what you wanted.    

Additionally, if you access any form of aged care assistance then the family member that is helping you with your finances will have to give an accounting for what they are doing with the assets to a third party, the question is not will my family fight, the question is what a Centrelink employee or a social worker will ask my attorney to “prove”.    

When these decisions are left until your capacity has started to diminish, they are more difficult, as everyone is emotional. Having a written plan in place helps your family at an emotional time and helps your attorney when a well-meaning third party starts asking questions.  

Choosing the right people  

A big part of setting up a great Estate Plan and reducing conflict and stress for your family is choosing the right structure, sure, but also choosing the right people.  We will help you to understand what each of the roles are and what characteristics you are looking for in an Executor, Trustee, Attorney or Guardian.  As an example of a well-intended Estate Plan, people often jointly appointed all beneficiaries as executors.  It seems like the ‘fair’ thing to do.  This usually causes the administration of the Will to slow down even if everyone is working together, because the four people need to be jointly signing every document.    Estates still very much run-on old-fashioned pen and paper, so mailing that document back and forth between four of you will take some time.  Things get worse if they don’t agree, or if someone is struggling to find the time to meet all of the requirements.  Additionally, even when you jointly appoint four there is normally one person who does the lion’s share of the work, but they have to go and get three other people’s permission to do that work.  

As part of our Estate Planning process, we will explain to you why appointing more people is not the answer.  The best thing is to appoint the correct person and then leave relevant and timely instructions about your wishes and information about your assets.