End of life and the law – Myths and Misconceptions

By Mitch Evelyn

Talking about death with a spouse, parent, child or next-of-kin  can be difficult or might seem like a morbid and faraway topic. It is for these reasons that it is sadly common for people to put-off thinking about their end-of-life plan until a crisis occurs – at which point it may be too late to put a much-needed plan into action.

Because the subject of dying can be grim or remote to think about, many people operate off incorrect assumptions about what will happen if they should become terminally-ill or lose capacity to make decisions about their own care.

In this article we examine a few of the most common misconceptions about the law in end-of-life scenarios.

Myth: My family can take care of my affairs if I can’t.

Fact: Your spouse or next of kin doesn’t have an automatic right to make decisions about your finances or healthcare if you cannot.

Many people put-off appointing a power of attorney[1] or a guardian [2] because they believe that their partner or next-of-kin automatically has the power to make decisions for them if they cannot do so – for instance, if they should be so ill that they cannot communicate their own decisions, or if they lack the mental capacity to make their own decisions.

The reality is that only a properly appointed Attorney or Guardian can make these decisions. If you do not have legally binding Power of Attorney and/or Enduring Guardian documents in place (the form of which is determined by the state or territory you live in) then:

  • Your spouse or next-of-kin CANNOT give healthcare instructions – your doctor will do anything they can to improve your health or prolong your life, even in cases of terminal illness, coma, or vegetative state and even if you have told your spouse or next-of-kin that you do not wish for your life to be sustained through life-support when there is no chance that you will recover.
  • Your spouse or next-of-kin CANNOT deal with your finances, unless they are held jointly. Your spouse or next-of-kin will not be able to deal with your real estate, even if it is jointly owned. They might also be unable to conduct other financial matters on your behalf, such as lodge your tax returns or deal with any other accounts (such as superannuation) in your name.

Myth: I shouldn’t appoint an Attorney or Guardian until I am sick, because they might do things I don’t agree with.

Fact: You decide when your attorney can make property or finance decisions for you. Your doctor decides when you are unable to make healthcare decisions for yourself.

If you appoint an Attorney through a legally valid Power of Attorney document, you can put any restrictions or limitations on the appointment that you want. You can control when the power comes into effect for your property and financial affairs.

Only a doctor can decide when your guardian’s healthcare powers come into effect, and this will only be when you cannot make decisions for yourself.

Myth: My family can decide whether to withdraw life support if there is no chance of me getting better.

Fact: The only person who can make this direction is your chosen Guardian, and even then you need to specifically document that intention.

Your doctor will do whatever is necessary to prolong your life or improve your health, even if it is not something you would want.

You need to give clear, written directions to someone who cares about you – either in a valid and enforceable Power of Attorney or Appointment of Enduring Guardianship document, or advance directive, to ensure that your wishes are respected.

Myth: I don’t need a Will because I have a “living Will”

Fact: A Power of Attorney, Advance Directive  or Appointment of Enduring Guardian does NOT remove the need for a Will.

Some people believe that their Power of Attorney, Advance Directive or Guardianship documents (sometimes called a “living Will”) mean that their Attorney or Guardian will be able to take care of their affairs once they have died. In reality:

  • Your Attorney or Guardian will not have any authority to deal with any of your affairs after you have passed away because the documents which give them power to manage your affairs are no longer valid after you die. Instead, after you die your executors – if appointed in a legally valid Will – then become the most important people in the eyes of the law and will be the only persons able to manage your assets.
  • Your Attorney cannot decide where your assets will go – this must be done in a legally valid Will.
  • Your Attorney or Guardian cannot make a Will for you, this can only be done by you while you have the decision-making capacity to do so.

Myth: I can appoint myself as attorney or guardian for my spouse, parent or child.

Fact: ONLY a person with adequate decision-making capacity can appoint someone as their attorney or guardian. Otherwise the appointment can only be made by the relevant Guardianship Tribunal of each state or territory.

If you do not appoint an attorney or guardian to make decisions for you, in the correct form and while you are well-enough to do so, then someone will need to apply to either the ACT Civil and Administrative Tribunal (ACAT) or the NSW Guardianship Tribunal to be appointed on your behalf. This can be a stressful and time-consuming process, particularly if all members of your family do not agree on the person who is applying.

The Guardianship Tribunal may also put limits on the powers of the person they appoint – such as arduous reporting requirements and requiring proof of suitability. They might even appoint a person who you would not want appointed.

elringtons’ experienced estate planning solicitors are here to make sure that your estate planning framework is correct, comprehensive and suitable for your needs. While looking into your Power of Attorney and/or Appointment of Enduring Guardian, we will also strongly recommend that you provide your us with instructions to draft or update your Will.

For more information or to make an appointment in either our Canberra or Queanbeyan office contact one of our Wills and Estate team:

p: +61 6206 1300 | e: info@elringtons.com.au


[1] An Attorney is a person who can make decisions about your property and financial affairs.

[2] A Guardian is a person who can make decisions about your healthcare and personal care if you cannot.

In the ACT, these are made in the same document (A Power of Attorney), but in NSW, these powers are divided into two documents – A Power of Attorney for financial affairs, and an Appointment of Enduring Guardians for healthcare and personal care.

Why Should I make a Will?

By Kerin Cotchett

Kerin CotchettMaking a Will provides a legal direction to ensure that your assets and possessions are distributed as you direct and/or wish when you die. Should you die intestate (without making a Will ), your estate may be divided using a statutory formula that may not necessary reflect the decisions you had intended and as a consequence, cause undue hardship, and/or extra cost and delay for your family.

Can I prepare my own will?

It is advisable to have your Will professionally drafted. A Will must conform to strict legal requirements otherwise the Courts may decide it is not valid. If this is the case your assets will be distributed according to a predetermined formula and not as you intended.

Anyone who is not legally qualified risks making a mistake, creating uncertainty or losing opportunities for good estate planning mechanisms if they make a Will for themselves.1 Ambiguous wording is extremely common in home-made Wills and may result in substantial cost and delay in having the Supreme Court resolve the ambiguity. It is also essential to ensure that a Will is signed and witnessed properly, if it is not, it will be invalid.

What if I die without a will?

If you die intestate or your Will is rendered invalid, an Administrator appointed by the court arranges payment of your liabilities which from your assets, then distributes the remainder, based on a pre-determined statutory formula, which may not be how you intended your assets to be distributed.

If you die intestate and don’t have any living relatives, your estate is paid to the state government.

If you are a sole company director and a sole shareholder and do not have a valid Will, your death may leave the company without any person properly authorised to manage the company immediately. See ASIC’s Information Sheet (INFO 73) The importance of sole company directors/shareholders having a will.

For more information please contact our Wills and Estate Team:

e: info@elringtons.com.au | p: 02 6206 1300

1. NSW Trustee and Guardian

 

What is an Executor?

Are you an executor of someone’s will?

If you are an executor named in someone’s Will it means that the person who has died wants you to look after his or her estate and to make sure that the Will is carried out according to its terms.  Sometimes, more than one executor is named.  In such case, you must work together to carry out the deceased’s wishes.

Is an executor paid?

Whilst you are entitled to apply to the Supreme Court for a commission for your work as executor, in most cases commissions are not claimed.  More importantly, if you are named as a beneficiary in the Will (you have been left some money or some other gift) then it is less likely that any claim for commission by you would be successful.

Do I have to be an executor?

You do not have to act as an executor if you do not wish to.  You may consult your solicitors to “renounce” your role and you are thereafter released from further participation.

What is an executor’s job?

An executor must make sure that all of the deceased’s assets and other property are both cared and accounted for.  This means that you must instruct a solicitor as to all of the assets of the estate as well as any liabilities of the estate.  You must make sure that all debts are paid and thereafter you must make sure that the assets of the estate are distributed to the beneficiaries as directed in the Will.

Sometimes, it is necessary to apply for Probate.  This is necessary whenever real estate is being dealt with or in cases where there are large sums of money or substantial investments and shareholdings.  Your solicitor can help you with an application for probate.  The application does involve filing documents with the Supreme Court.  The Court checks to make sure that everything is correct and once probate is granted, for all intents and purposes, you stand in the shoes of the deceased person.

Sometimes, in the case of very small estates, it is not necessary to apply for probate and the estate may be distributed to beneficiaries with a minimum of fuss and expense.

When does my job start?

Your role as the executor only starts after the deceased has died.

In most cases you will know that you have been appointed as an executor and you will generally consult the solicitor who holds the Will.  That solicitor will advise you on what you need to do in order to bring in all of the assets of the estate, to pay debts and thereafter to distribute those assets to the beneficiaries named in the Will.  This may involve a number of visits to the solicitor for the purpose of approving and signing documents and the whole process can commonly take a minimum of three months and anything up to a year.

You are not meant to spend your own money with respect to the estate and in the event that you do expend any moneys (for example, in organising a wake or a funeral) then you are entitled to be reimbursed from the estate.  It is important for you to make sure that the estate is able to reimburse you before you spend money on behalf of it.

Why have I been appointed?

An executor is usually appointed by a deceased person because the deceased feels that the executor is a reliable and honest person.  In many cases, the executor may be a spouse or child of the deceased person and also, in a lot of cases, the executor may be a sibling or close friend of the deceased.

Being an executor is a very important job particularly for the family of the deceased person.  It is not always a pleasant job but it is one which must be done for the benefit of the deceased’s loved ones and friends.

elringtons can assist you with all aspects of your role as an appointed executor, and we have an experienced team of probate and estate lawyers and paralegals to guide you.

For more information, call 6206 1300 to speak to one of our experienced Wills and Estates team members.

When should you change your will?

It is advisable that you should change your Will not less than every 5 years. It is most important that your Will is an accurate reflection of your testamentary wishes.

As your cirmcumstances change you need to consider your will.

If you are getting:

  • married,
  • divorced,
  • starting a family,
  • have become a grandparent or
  • have disposed of some assets

you need to update your will to reflect your wishes in the changed circumstances and know that your will is legally valid.

There are many other circumstances when it is appropriate to change or amend your Will. For example, your Will may be revoked by legislation without you even knowing it. In most jurisdictions, divorce from a spouse will have the effect of revoking a will where the spouse was nominated as sole executor and beneficiary. In most jurisdictions, marriage or a civil partnership will also revoke a will.

It is common for people to give specific assets to specific beneficiaries. A testator may wish to do this for a variety of reasons, for example if the beneficiary has a personal interest in a particular asset. However, gifting assets (rather than a share in your estate) can be hazardous if you part with possession of a particular asset, and you also should ensure that you have legal ownership of it in the first place. Your Will must be updated if you sell any asset that is specifically named in your Will as a gift. The reason for this is because it may change the order in which your estate is distributed, and the shares that your beneficiaries will receive.

For example, let’s say Paul’s Will states the following:

  1. I give my house at 1 Smith Street in Canberra to my daughter Jane.
  2. I give my unit at 2/41 Ocean Drive in Manly to my son John.
  3. I give the residue of my estate to my children Jane and John equally.

If the property at Smith Street and the property at Ocean Drive were of equal value (that is $500,000 each) and there is $100,000 in the remainder of estate, then if Paul sells his Canberra property (and forgets to change his Will) and then dies, Jane will receive only $50,000 where John gets $550,000.

Also consider the situation where Paul owns the Canberra property with his ex-wife as joint tenants without realising, because the ownership was not changed after his divorce – upon his death the Canberra property will transfer absolutely to his ex-wife, and again Jane will miss out.

Therefore, it is important to consider any inequalities that may eventuate within your current Will. A distribution such as that referred to above (where Jane receives $50,000 and John receives $550,000) will leave the door open for Jane to contest the Will and claim a greater amount of money which could lead to family disputes.

Codicils used to be a quick, easy and inexpensive way of making amendments to your Will. However extreme caution should be used when using codicils. Because a codicil is a separate document to your Will, it may be easily misplaced or forgotten when your trustees go to administer your estate. With the aid of modern document producing technology, it is much easier now to draft a new Will. You should give consideration to having a new Will drafted if you currently have a Will and codicil combination.

We recommend amending your will where there has been a death, birth, marriage, divorce or change in financial circumstances (such as the acquisition of assets). elringtons can assist in advising you on all of your estate planning needs.

For more information please contact our Wills and Estate Team:

e: info@elringtons.com.au | p: 02 6206 1300

 

Where will your super go when you die?

When you are formulating a Will, it is not well known that your hard-earned superannuation does not automatically form part of your estate.

Generally, only assets owned in your name such as your house, car, investments and savings will make up your estate and can be dealt with under your Will.

Your superannuation is held by the trustee of your superannuation fund and there are special rules that govern how a trustee can distribute your superannuation after you die. Under those rules, there are people who may be able to make a claim on your superannuation that you did not wish to or expect to benefit.

Nomination

You can have some control over where your superannuation will go by making a nomination. This means that you nominate someone to receive your superannuation upon your death. However, a trustee is not obliged to follow a non-binding nomination and may elect (in accordance with governing legislation) to distribute the money to someone other than your nominee.

Binding Death Nomination

Often you will have the option of making a binding death nomination. This is binding upon your superannuation trustee. However, you must be sure to:

  • Update it if your circumstances change – for example, if you marry or divorce; and
  • Renew it, because a binding nomination will lapse every three years from the date it is first signed, last amended or confirmed.

You can nominate your estate or your personal legal representative under a binding death nomination, and the trustee will then pay your superannuation to your Estate. This means that your superannuation will then be distributed in accordance with your Will. Alternatively you can nominate a spouse or family member who you wish to receive the benefits.

If there is no binding nomination, then the trustee can elect to pay your superannuation to your estate, or it can pay to your dependants. Your dependants are your spouse (including a separated spouse), children, a partner (including same-sex partner) or someone else with whom you have an interdependency relationship and those who depend on you financially in any other capacity.

This can create uncertainty for surviving family members who are trying to pay debts and administer your estate. When you are the proprietor of a business, you may wish for your superannuation to be available to your personal representative to deal with business debts as they see fit. Or you may prefer that your superannuation not be used to cover business debts and instead be allocated to support your surviving family.

Careful planning is needed to ensure that you have control over the process.

For more information or to make an appointment please contact our Wills and Estate team:

p: 6206 1300| e:  info@elringtons.com.au