4 October 2023
Written By Callum Pritchard
Creating a will and estate planning documentation is one of the most important legal steps every Australian should consider. A will, also known as a last will and testament, is a legally binding document that outlines your wishes regarding the distribution of your assets and the care of your loved ones after your passing. In this article, we will discuss why it is crucial for Australians to have a will, the different types of wills available, enduring powers of attorney, and enhanced medical directives.
Why Have a Will?
Asset Distribution: One of the primary reasons to have a will is to ensure that your assets are distributed according to your wishes. Without a will, your estate may be subject to rule which are different in every State and may result in your assets being distributed in a way that does not align with your intentions.
Guardianship of Children (minors): If you have children, your will allows you to nominate a guardian to take care of them in the event of your death.
Peace of Mind: Creating a will provides peace of mind. Knowing that your wishes will be known and respected, and your loved ones will be taken care of can alleviate stress and uncertainty.
Avoiding Family Disputes: Having a clear and legally valid will can help prevent disputes among family members over the distribution of assets, reducing the likelihood of costly legal battles.
Some individuals may believe that they don’t possess enough assets to warrant the creation of a will, thinking it’s a concern only for the well off. However, this is a common misconception. Regardless of the size of your estate, having a will is beneficial. Even if your assets are modest, a will allows you to make specific bequests, designate beneficiaries for sentimental items, and clearly outline your intentions.
Moreover, a will can simplify the distribution process for your loved ones and reduce the burden of administrative expenses and legal complexities. It’s not just about wealth; it’s about ensuring that your wishes are honored, your loved ones are cared for, and your legacy is protected, no matter the scale of your estate. So, regardless of your financial circumstances, having a will is a responsible and prudent step in planning for the future.
Types of Wills
In Australia, there are several types of wills that you can consider based on your specific circumstances:
Simple Will: A simple will is the most basic type of will and is suitable for individuals with straightforward estate planning needs. It outlines how your assets will be distributed directly among beneficiaries and would include the appointment of an executor to manage your estate.
Testamentary Trust Will: This type of will establishes testamentary trusts to manage and protect assets for the benefit of specific beneficiaries. It is often used to provide for minor children or individuals with disabilities and can help protect assets intended for bloodline (lineal descendant) beneficiaries, which can provide tax planning flexibility.
Mutual Wills: Mutual wills are typically created by couples and are essentially mirror wills. In mutual wills, each partner leaves their assets to the other and outlines how the assets will be distributed after the surviving partner’s death.
Enduring Powers of Attorney (EPOA)
In addition to a will, it’s crucial to consider enduring powers of attorney (EPOA). An EPOA is a legal document that allows you to appoint someone you trust (known as your attorney) to make financial and/or personal decisions on your behalf if you become unable to make those decisions yourself due to illness, injury, or incapacity, as deemed by a medical professional.
There are two main types of EPOA in Australia:
Financial EPOA: This grants your chosen attorney the authority to manage your financial affairs, including paying bills, managing investments, and selling assets, on your behalf.
Personal EPOA (Medical EPOA): A personal EPOA allows your attorney to make personal and health-related decisions on your behalf, including medical treatment choices, accommodation arrangements, and lifestyle decisions.
It’s important to select an attorney you trust implicitly, as they will have significant responsibility and authority over your affairs if you become incapacitated. Trust is crucial, but they must also have the ability and experience to make difficult decisions when required.
Enhanced Medical Directives
Some Australian states and territories allow individuals to create enhanced medical directives, which go beyond specifying medical treatment preferences. These directives allow you to appoint a substitute decision-maker (often called a medical enduring power of attorney) who can make decisions about your medical treatment if you are unable to do so. They can make decisions that align with your values, beliefs, and preferences. These forms require consultation and sign-off from qualified medical professionals.
Estate planning solutions, whether creating a simple will or more complex testamentary trust wills, enduring powers of attorney and/or enhanced medical directives are essential steps to ensure wishes are respected, loved ones are cared for, and assets are distributed according to desires. These legal documents provide peace of mind and can help avoid conflicts and uncertainties during difficult times.
When considering these important estate planning documents, it is advisable to seek legal advice from a qualified professional who specialises in estate planning, such as JHK Legal. We can help you navigate the legal requirements and tailor these documents to your specific needs and circumstances, ensuring your legacy and interests are protected. By taking these steps, you can have confidence in the security and well-being of your loved ones and your assets.