You need an estate plan (even if you think you don't!)

You need an estate plan (even if you think you don’t!)

Estate planning might seem like something you don’t need to worry about until later in life. With career goals, relationships and travel plans taking priority, thinking about a Will or Power of Attorney might feel irrelevant.

But the reality is that having an estate plan isn’t just about what happens when you’re older – it’s also about protecting yourself now.

From ensuring your finances are managed if something happens to you, to deciding who gets your assets, an estate plan gives you control over your future if the unexpected happens. Without one, you may be left unprotected, as the below scenarios show.

Accidents happen

When Luke, 24, was involved in a motorbike accident and left in a coma, his mother Jane tried to access his bank account to cover his rent and credit card bills. She told the bank that she was Luke’s mother and what had happened, but the bank rejected her request. They advised her that being a parent was not enough to give her access to Luke’s bank accounts.

Jane then tried to pause some subscriptions for Luke, as well as complete his tax return, which was overdue, but she was again unsuccessful.

Without a power of attorney in place, Jane was unable to make any financial decisions for Luke. Had Luke prepared a power of attorney document ahead of time, Jane could have immediately stepped in to help him when he had his accident.  

No one expects the worst, especially when you’re young and healthy, but life is unpredictable. Accidents or illness can happen at any time.

Once you turn 18, your parents no longer have the legal right to manage your affairs, even in emergencies. To give them (or someone else that you trust) that authority, you need to appoint them as your power of attorney. Without it, they will be unable to help you, even if you want them to.

Dealing with superannuation

At 29, Daniel was in a long-term relationship with his girlfriend Beth, but he wanted his superannuation to go to his siblings if anything happened to him. He filled in the relevant forms with his super fund to nominate his brother and sister.

Daniel passes away suddenly and his siblings approach the super fund to make a claim. They are then told that the nomination to them was invalid, as superannuation can only be paid to eligible dependants, such as a spouse or child. The super fund advises Daniel’s siblings that all of Daniel’s super will go to Beth.

If Daniel had received the right advice ahead of time, he could have taken additional steps to create an estate plan and ensure his super ended up with his siblings, rather than Beth.

Superannuation doesn’t automatically follow your Will, and only certain people, like spouses and children, can receive super directly. To make sure your wishes are followed, its important to speak to someone who can guide you through the superannuation rules and ensure that you prepare the right documents to achieve your desired outcome.

Avoiding the “default scenario”

At 27, Emma passed away unexpectedly. Because she did not have a Will in place, her assets were distributed according to a legal formula, known as intestacy. Even though she hadn’t spoken to him in years, her father became entitled to all her assets.

If Emma had made a Will, she could have left her assets to her close friends instead, who would now receive nothing.

If you pass away without a Will, your estate will be distributed according to the intestacy legislation in your State or Territory. This strict formula does not take into account any relationships that you may have with close friends or family members and can result in your assets going to a family member that you do not wish to benefit (or may not even know).

By having a Will in place, you get to choose who inherits your assets and who manages your estate, avoiding uncertainty and complications for your loved ones.

Travelling overseas?

After completing his studies, James took the plunge to work and travel overseas. He had planned on being away only 12 months but has since decided to stay another year. He asked his friend Blake, who is also his power of attorney, to help sell his car.

Blake advertises the car and soon finds a buyer. The buyer asks Blake to complete the relevant paperwork and confirm he is authorised to sell the car.   As James appointed Blake as his attorney, Blake can do all of this for James without him being in Australia.

Estate planning is not just about worst-case scenarios such as if you lose capacity or die – it can also help you manage your legal and financial affairs from far away.

If you are considering a gap year or long term stay overseas, a power of attorney document can authorise a family member or friend to handle any steps that cannot be completed online and need actioning in Australia.

Taking control now

Taking action now is easier than you think and can ensure that you are looked after if the unexpected happens.

If you have any questions, or would like more information about how we can assist you, please call 1800 867 113.  To organise a confidential discussion at a time that suits you, please click here