What is Estate Planning?

Estate planning is the process of anticipating and arranging for the disposal of an estate during a person's life. Estate planning typically attempts to eliminate uncertainties over the administration of probate and maximize, where possible, the value of the estate by reducing taxes and other expenses.

An Estate Plan includes your will as well as any other directions on how you want your assets distributed after your death. It includes documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.

Key documents that form an estate plan include the following:

• Will
• Testamentary Trust
• Enduring Power of Attorney
• Enduring Power of Guardianship
• Superannuation Death Benefit Nominations
• Advance Health Directive

If you have made a binding nomination in your superannuation fund or insurance policies, the beneficiaries named in those policies will typically override anyone mentioned in your will. If you have a family trust, the trust continues and its assets will also usually be distributed according to the trust deed, no matter what is written in your Will.

Wills

A Will takes effect when you die. It can cover things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you'd like donated to charities and even instructions about your funeral.

If you die without a Will the Government will distribute your assets according to a strict legislative formula. Having a court appointed Administrator deal with such an estate can be costly and time consuming and the assets may not be distributed in the way you would have intended.

It is important that your Will is reviewed on a regular basis to ensure that it continues to reflect your wishes.

Testamentary Trust

A Testamentary Trust is a trust that is contained within a will that only takes effect when the person who has created the Will dies. Testamentary Trusts are usually established to protect assets.

A Testamentary Trust will be administered by a trustee who is usually appointed in the Will. The trustee must look after the assets for the benefit of the beneficiaries until the Testamentary Trust expires.

The expiry date of a Testamentary Trust will be a specific date such as when a minor reaches a certain age or a beneficiary achieves a certain goal or milestone, for example; getting married.

Death Benefit Nomination

Superannuation funds do not form part of your estate and therefore are not able to be 'willed'. Depending on the trust deed of your superannuation fund, you may be able to make a binding nomination on the trustee of the superannuation fund to pay the benefit to the nominated person.

Enduring Power of Attorney

An Enduring Power of Attorney is a document which gives the Attorney named the power to act on your behalf during your lifetime. This usually involves looking after your investments and other financial matters. Importantly, an Enduring Power of Attorney continues to operate even if you become permanently ill and are unable to make clear decisions as a result of lost mental capacity.

Enduring Power of Guardianship

An Enduring Power of Guardianship is a legal document that authorises a person of your choice, to make important personal, lifestyle and treatment decisions on your behalf should you ever become incapable of making such decisions yourself. This person is known as an enduring guardian.

An enduring guardian could be authorised to make decisions about things such as where you live, the support services you have access to and the treatment you receive.

An enduring guardian cannot be authorised to make property or financial decisions on your behalf.

Advance Health Directive

An Advance Health Directive ("AHD") is a legal document, which contains your decisions about future treatment (treatment decision) and can only be completed while you have the ability to make and communicate decisions (i.e. you have 'capacity'). As soon as you no longer have capacity, you are no longer able to complete an AHD. It is also important to know that no one else can complete an AHD for you once you have lost capacity.

If you have chosen not to make an AHD, a treatment decision will be made on your behalf in the event that you are unable to make the treatment decision for yourself. The treatment decision will be made by (in the following order or priority) your Enduring Guardian (if you have appointed one), your guardian (if one has been appointed to you), or by a person responsible for you (such as your spouse, parent, child, siblings or unpaid carer).

An AHD will only come into effect if you are unable to make and communicate your own judgements about treatment later on.

Treatment includes medical, surgical, palliative, dental and other health care.