27/11/2015

Welcome to the final instalment in our Educating Young Adults series. This month we look at the things that you can put in place that form part of your estate plan alongside your Will to ensure that your final wishes are your command.

Congratulations! You have started to think about the birds and the bees of superannuation and now you know you need to create a Will before you actually ‘need’ it. BUT having a Will is just the first step in having a comprehensive estate plan.

“When I’m gone, just carry on” – have you prepared enough so they can?
We know that this topic is not the most sunny-side-up of conversations, but it is absolutely essential that the conversation is had. Too often the story goes “we thought we had more time”. The truth is you never know; an illness could be very unexpected and accidents are just that – an accident. Prepare now, your loved ones will thank you for it when you’re gone.  

We suggest 5 other considerations to make sure that the formal processes are as simple as possible, and your family and friends can concentrate on what’s important.

1.    Another ‘super’ superannuation decision – don’t wait, nominate!
“I leave everything to my spouse” – this means everything right? Wrong! Your Will doesn’t automatically cover your superannuation death benefits. In fact, a Will would only cover superannuation IF the beneficiary of the benefits is the estate. You may wish to make a specific nomination as to how you would like your superannuation and/or life insurance policies to be dealt with.

A binding death benefit nomination (BDBN) allows you to nominate who receives the benefits of your super, and in what proportion. As long as this is valid at the time of passing, it binds the Trustee to honour your final wishes. Keep in mind a BDBN must be compliant with the Trust Deed of the Fund.

Top Tip: the inclusions in your Trust Deed will determine (directly or indirectly) whether or not the BDBN is lapsing or non-lapsing (this is important to know so you can update it as needed).

Making your nomination (and making sure it is effective) is not a DIY job – there are technical requirements to be met so make sure you speak to someone who has done it all before!

Of course you do have the option of making it non-binding. With this option you can indicate what you would like to happen but the decision is left with the Trustee.  That way they can take into account how your life may have changed and potential tax implications at the time of distribution.

No nomination, that’s fine, but the entire decision as to whom receives the benefits, and how, is left with the Trustee. Wherever the Trustee makes a decision it is open to be challenged, so keep that in mind as well.

2.    Who makes my decisions if I can’t?
It is important to think about who you want to be in control if you no longer can be – and that you put it in writing. Each state has specific names and requirements for this so it is imperative that you seek advice to ensure the document is valid.

An Enduring Power of Attorney means appointing someone to make financial and legal decisions for you. It will endure even if you lose capacity so make sure it is someone that you don’t feel the need to monitor the decisions of. This appointment can be changed, so long as you have capacity. A power of attorney that is not enduring will not continue if you lose capacity, so make sure you make it enduring for future planning.

An Enduring Power of Guardianship means appointing someone to make decisions about your medical care and lifestyle (including where you live). For example: if a person was incapable of caring for themselves, their Guardian might decide that a nursing home is appropriate. The law around Guardianship is very state-specific – and it is important to take a careful look at what applies to you!

An Advanced Healthcare Directive (Living Will) is a document that outlines your wishes as to medical decisions that may need to be made in the future. This could include treatments that you do not want and at what point you wish for an illness to take its natural course. This document is helpful to medical professionals and loved ones when tough decisions need to be made.

3.    Testamentary Expenses – tying up the loose ends
Your testamentary expenses must be paid out of your estate prior to any other gifts being made. This could include debts and liabilities of your estate and/or literally the cost of putting you six feet under. That is unless you have set up a funeral plan during your lifetime and the cost of that at least is all paid off!

So what about the decision about your final resting place? Unfortunately you are not able to “gift” your remains to any particular person in your Will BUT you can make your intentions clear by including them in your Will and/or a Memorandum of Wishes kept with your Will. It is important to note that this won’t be binding but hopefully will be respected.

4.    Name a guardian for your children – even if you have none!
There is a good chance that many of you reading this don’t yet have children (or grandchildren for the mums and dads), but that isn’t always planned either. If a series of unfortunate events do occur it could save a lot of hassle if your wishes as to a guardian for your children are already set out.

Setting out who will be your child’s guardian (if both parents are deceased) is important and ought to be included in your Will – this will likely be binding, unless the guardian refuses to accept the responsibility or a court rules otherwise. Any wishes you might have for how children are raised - for example, religion or schools - needs to be put into a Memorandum of Wishes and kept with the Will. This isn’t binding but again it makes your wishes clear.

5.    Man’s best friend can’t fend for themselves should something happen to you – make plans!
They were your best friend in life; look after them after your death. Similarly to making a direction for the wellbeing of your children, make a direction for a guardian for your pets. Your pet is your property and so the gift will be enforceable. Another simple inclusion that can save unnecessary troubles.

If this sounds like something that you are ready to look into then please contact For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.  We are more than happy to assist you with developing your comprehensive estate plan.