Wills, Power of Attorney & Enduring Guardianship
In New South Wales there are three important courses of action which individuals should contemplate when considering how their affairs are to be dealt with in the event that they become of unsound mind, become physically incapable of dealing with their affairs or die.
- Prepare a will;
- Power of Attorney and
- An Enduring Guardianship.
A will can range from a simple document such as those usually known as “mum and dad” Wills to quite complex documents involving testamentary trusts, life estates and other structures designed to address special circumstances, taxation issues and asset protection.
Whilst the “homemade” or “newsagent” will can be effective, their use is a dangerous strategy as frequently they omit essential details which can lead to delays in dealing with your estate, expensive litigation or your wishes not being followed. This is a costly consequence of avoiding the cost of having your Will prepared by a professional.
A common mistake made when preparing a homemade Will include the failure to correctly appoint executors to manage the estate, not providing for all the assets (especially assets acquired after the date of the Will or residual assets) or not allowing for the fact that a beneficiary may pre-decease the Will maker. Each of these may result in an application to the Supreme Court for Letters of Administration having to be made and often creates dispute between interested parties.
Another common problem is that homemade Wills often include assets which do not form part of a person’s estate. In an age of complex financial affairs including joint ownership of assets, life insurance proceeds and superannuation proceeds it is not always easy to identify the assets which will be dealt with by a Will and those which will by-pass the estate.
Did you know that:
- With few exceptions, marriage automatically revokes a Will unless the Will has been expressed to be made in contemplation of that marriage. If you are relying on a Will that pre-dates your marriage you may in fact have no Will.
- If a gift is made under a Will to somebody who witnesses the Will or to that person’s spouse that gift is, except in certain specified circumstances, void.
- Termination of a marriage means that any gift in a Will made to a former spouse is revoked.
- If you leave a gift to your child who dies before you leaving children who are living at the time of your death, the gift does not lapse. The trap however is that it does not necessarily go to the children of your deceased child. It goes in accordance with the law which applies to that person’s estate unless this contingency is dealt with in your Will. The failure to address this contingency in your Will may be that part of your Estate ends up in the hands of a total stranger.
It is false economy not to obtain proper legal advice concerning the making of a Will.
Power of Attorney
Increasingly people are being advised to execute Powers of Attorney, with the aim of having some person(s) who they trust (often relations) act on their behalf in relation to a signing documents and performing of acts relating to their financial and other affairs.
A Power of Attorney ceases to have effect if the person giving the Power of Attorney loses their mental capacity UNLESS the Power of Attorney expressly states it will continue to be effective notwithstanding loss of capacity through unsoundness of mind. Such a Power of Attorney must be endorsed with a certificate by a prescribed person (a solicitor, barrister, clerk of the Local Court) explaining the effect of the instrument to the person before it was executed. Without the certificate, the Power of Attorney ceases to be effective when the person giving the Power of Attorney becomes incapacitated through senility otherwise.
Powers of Attorney can be general (where the appointed person can do anything the appointer can lawfully do) or they can be restricted. For example, the document may say that the attorney can do all things except transfer the title of any real estate.
In NSW it is now possible to appoint a person as an “Enduring Guardian”. This appointment empowers a person to make lifestyle and medical treatment decisions for you if you are incapable of doing so.
The functions referred to in the Guardianship Act Section 6E are:
- Deciding the place, (such as a specific nursing home or the appointor’s own home) in which the appointor is to live.
- Deciding the health care that the appointor is to receive.
- Deciding the other kinds of personal service that the appointor is to receive.
- Giving consent under Part 5 to the carrying out of medical or dental treatment the appointor.
- Any other function relating to the appointor’s person that is specified in the instrument.
The Appointment of Enduring Guardianship needs to be witnessed by a legal practitioner as does the acceptance of that Appointment. The Appointment may be reviewed by the Guardianship Board or by the Supreme Court and is revoked on marriage of the Appointor.