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Superannuation & Investments

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Estate planning

• The Will
• Testamentary capacity
• Probate
• Dying without a will
• Powers of attorney

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Estate planning is essentially the planning and documentation of the wishes of a person for the distribution of all the assets under the control of that person following their death or if they lose legal capacity.
An estate can comprise of:

• Real property
• Shares
• Loans
• Income or capital allocated by the will maker; and/or
• Cash investments.

Assets that do not form part of the estate include:

• Jointly owned assets that are held as joint tenants eg family home. (If the owners are tenants in common, the rights to a portion can then become part of the estate)
• Super pensions or annuities (except when directed by the member to be paid to the estate); and
• Life Insurance proceeds (except when the deceased is the policy owner and no beneficiaries are nominated).

It is important to differentiate between estate and non-estate assets as only the distribution of estate assets can be directed by a will upon death. 

The Will

A will is the last legal direction that a person can give, effectively following his/her death. For most people the will is the most important part of estate planning. The person that the will is being prepared for is called the testator (male) or testatrix (female). For a will to be valid in the eyes of the law it generally needs to be:

• In writing
• Signed by the will maker
• Two witnesses must witness the signature of the will maker (both of whom must be present at the time the will maker signs and each witness must sign in the presence of the will maker); and
• Made by a person who has Testamentary capacity unless consent has been given by the Supreme Court.

It is important that a witness is not a beneficiary or a spouse of a beneficiary named in the will. If these requirements are not met it is possible that the will may be viewed as invalid, but it is up to the discretion of the Court. The law pertaining to the writing of a will is legislated at state level.
The maker of the will must consider issues related to the circumstances of the beneficiaries such as:

• Taxation consequences
• Ability to manage fund;
• Potential family law problems; and
• Avoiding potential challenge of the will.

Having a will constructed does not have to cost a lot of money.  You should arrange to see a solicitor or speak to one of the government agencies listed below:

Government Agency	Contact Details
The Public Trustee of NSW	1300 364 103 www.pt.nsw.gov.au
State Trustees (Victoria)	(03) 9667 6444 www.statetrustees.com.au
The Public Trustee for the ACT	(02) 6207 9800 www.publictrustee.act.gov.au
The Public Trustee Tasmania	1800 068 784 www.publictrustee.tas.gov.au
The Public Trustee of Queensland	(07) 3213 9288 www.pt.qld.gov.au
The Public Trustee of South Australia	(08) 8226 9200 www.publictrustee.sa.on.net
Office of the Public Trustee NT	(08) 8999 7271 www.trustee.nt.gov.au
Public Trust Office – Wills (WA)	1800 642 777 www.justice.wa.gov.au

You should also give a bit of thought to who you wish to nominate as the executor of your estate.  As the job can be complex and is quite onerous the executor should be:

• honest;
• likely to out-live you and be alive when the youngest beneficiary will become entitled to possession of the assets; and
• able to fulfil the duties of the job.

The maker of the will must also be aware that some circumstances, such as marriage or termination of marriage, may have the effect of revoking or altering the will. It is necessary to revise the terms of your will on a regular basis, and to make a new will if circumstances change for your estate to be distributed according to your wishes.

Testamentary capacity

The maker of the will must:

• Be of sound mind at the time of making the will
• Be of the age of 18 years;
• Have a reasonable grasp of the extent of their assets; and
• Comprehend the claims of the named beneficiaries and the claims of those whom he/she is excluding.

If these tests are satisfied, it is said the maker of the will has testamentary capacity.

One of the most important decisions the maker of the will has to decide is who to appoint as an executor of their estate. It is the responsibility of the executor(s) to ensure that the requests are carried out as the maker of the will had instructed. The executor can be held personally liable for any negligence or omitted acts. Some of the responsibilities of the executor include:

• Funeral arrangements
• Seeking probate
• Collecting the estate
• Paying debts in the proper order
• Distributing the estate according to the wishes of the deceased; and
• Preparing tax returns.

It is usual practice for the main beneficiary to be appointed executor of the estate. Other common executors are solicitors, accountants and public trustees. These parties will normally be paid by the estate for their service.

Probate

Probate is the terminology used when the estate assets are passed over to the executors. This is done through the Court in each state. The executors have to swear to faithfully administer and to complete proper application of the estate. Often the estate can be tied up until the grant of probate is obtained. No one has the power to deal with the assets of the estate until probate has been obtained.

Dying without a will

When a person has died without a will or with an invalid will, they are said to have died "intestate". The rules of law in each state preside over the way the estate is administered and to whom the assets are passed on. The Court grants letters of administration to the person who would benefit greatest according to the law. The Letters of Administration give that person the same entitlements as probate. The allocation of assets varies greatly across Australian states and territories because individual states and territories have jurisdiction over laws of inheritance.

Powers of attorney

In addition to ensuring that your affairs are in place in the event of death, it is also important that you consider planning for someone to look after your affairs if you are unable to.

Powers of attorney protect the living.  They are legal documents that allow you to appoint a person (eg an agent) to act on your behalf.  The power may be as broad or specific as you wish and these documents generally take two forms:

• General Power of Attorney
• Enduring Power of Attorney

A general power of attorney allows an agent to act on your behalf but ceases if you lose legal capacity. 

In contrast, an enduring power of attorney allows you to appoint someone to take care of your affairs when you are unable to do so yourself. Some tasks that the agent may perform include:

• paying your bills
• managing your investment portfolio
• deciding about your daily care

For this reason is it very important to choose an agent wisely (if you choose to do so at all) as if you lose mental capacity and have an enduring power of attorney you can not revoke it. Attributes that you should look for in your agent include:

• someone you can trust;
• someone who understands your wishes ; and
• someone who is competent and has time to fulfil their duties.

What is the alternative? If you do not have an enduring power of attorney and you lose mental capacity, the State will appoint someone to manage your day to affairs. The person appointed may not be favourable to you.

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