The main estate planning documents are a will, a power of attorney and a medical/health care directive. They are essential to ensuring your affairs will be managed and your assets distributed in the way you want.
Preparing these documents now can make a big difference to the people close to you, ensuring they’re looked after if you’re not here to take care of them.
With these legal documents in place, you will have peace of mind and can be confident that your affairs will be managed smoothly, and your assets distributed quickly, saving you and the people close to you time, stress and expense.
Estate planning: Your will
A will nominates who you would like to manage your estate and who you want to leave your assets to when you die. If you die without a will (called dying ‘intestate’) your assets will be distributed according to intestacy laws and a formula will be used to work out who receives your assets. This can add complexity, expense and delay to your assets being distributed to the people you intended, at what is already a difficult time for them.
Estate planning: Power of attorney
A power of attorney nominates who you would like to manage and make decisions about your financial affairs while you’re alive. This includes things like operating your bank account, paying bills, buying and selling property and other investments on your behalf.
There are two types of power of attorney:
A general power of attorney has effect while you have capacity to manage and make decisions about your financial affairs yourself.
An enduring power of attorney has effect if you lose capacity to manage and make decisions about your financial affairs yourself. Without an enduring power of attorney, a relative or friend must apply to a court or tribunal to be appointed as your financial administrator, which can be a complex and costly process. It’s also uncertain if the outcome will reflect your wishes, especially if a state-based trustee is appointed.
In some states and territories, you can have a medical power of attorney, which nominates who can make decisions about your medical affairs while you’re alive and can no longer make these decisions yourself.
Estate planning: Medical/health care directive
A medical/health care directive nominates who you would like to make decisions about your personal, lifestyle and health affairs while you’re alive and if you’re unable to make these decisions yourself. These decisions include things like where you would live, what personal and health care services you would want to receive, your consent to medical or dental treatment and your preferred life-support choices.
If you lose capacity and don’t have a medical/health care directive, then a ‘person responsible’ under guardianship law - meaning your spouse, carer, relative or friend (in that order) - can give consent, but only in relation to your medical or dental treatment.
Any decisions about your other personal, lifestyle and other health affairs cannot be made by a ‘person responsible’. Instead, a relative or friend must apply to a court or tribunal to be appointed as your guardian. This can not only be complex and expensive, but possibly detrimental to your wellbeing, if timely decisions about your health are not being made.
In some states and territories this is referred to as enduring guardianship and can also include advance care directives and plans where you set out your preferred medical treatment and end of life wishes.
The time to get prepared is now, before it’s too late
Having an estate plan with the right legal documents in place can be crucial for your future health and lifestyle, and the wellbeing of people close to you. They ensure that your wishes are carried out even when you’re no longer around.
You can only make these legal documents while you still have capacity to make decisions for yourself. If something happens to you and you lose capacity to make decisions yourself, it’s too late.