Separating? Update your Will and Enduring Power of Attorney ASAP!

I know it is probably the last thing you are considering right now amongst all the other issues you are dealing with during your separation, but there are a number of key documents which you should seriously consider drafting and/or updating as soon as you reasonably can after you separate in order to ensure your wishes are correctly and respectfully fulfilled, your intended beneficiaries are legally protected and the appropriate executors and guardians are appointed. In particular, you need to update your personal details, wishes/intentions, trustee/executor/guaradians, general instructions and nominated beneficiaries under any Trusts, Life Insurance, Superannuation, Enduring/Power of Attorney, Will, and your Health Directives.

For the purposes of this blog, we will be specifically addressing your Will and Enduring Power of Attorney and the importance of drafting and/or amending these at the time of your separation (whether married or defacto).

Why do I need a Will?

Even if you don’t think you have a lot of assets to leave behind to anyone, having a Will is very important. The Will appoints an executor to administer your estate (ie to carry out the instructions in your will) and outlines who the beneficiaries will be, how your property and personal items should be distributed. The executor is normally someone who is trustworthy, financially responsible, organised and respected by the beneficiaries.

The Will also usually specifies who the guardians of any minor children or dependants would be.

Without a Will, your estate may not be distributed according to your preferences, and your loved ones could face a lot of added stress, time and costs in settling your affairs.

Potential tax and stamp duty benefits of an effective Estate Plan

You can obtain a number of benefits by having an effective estate plan for example setting up a Testamentary Trust within your Will which can have significant tax benefits and transfer of titles to reduce or avoid stamp duty being paid. We recommend you seek advice regarding this.

What if I have a Will but it is not updated?

• There can be unintended consequences such as your assets going to unintended beneficiaries, (including your former partner and their family) important details being left out, or taxes being higher than they need to be.

• Certain changes in laws and regulations could make certain provisions of your outdated Will or Enduring Power of Attorney invalid or ineffective.

• You want to avoid potential disputes among beneficiaries and delay the intended beneficiaries getting access to your estate and wasting huge sums on contesting the Will.

• You want to ensure the executor of your own Will and any trustee under a Trust, is someone you still trust to fulfil their duties and carry out your wishes.

Can a Separation affect my Will?

If you were married or in a de facto relationship and had a valid Will leaving some or all of your estate to your then spouse/partner, even if you are then later separated at the time of your death, the contents of your existing Will would usually still be valid and your former spouse/partner would still receive their entitlement under the Will.

If you are legally separated, but not yet legally divorced at the time of your death, your former spouse may also still act as your estate's executor (if you had appointed them as such under your Will), thus manging the administration of your estate, whether you wanted them to or not.

The situation is different where there is no Will. In that case, the laws of intestacy apply to determine whether or not a spouse (married or de facto) has an entitlement to any part of their partner's estate. Whilst not guaranteed, you should note that there is a strong chance that without a WIll, your former spouse will potentially inherit everything under the laws of intestacy.

Is my Will still valid after we are divorced?

In all Australian states and territories, except for Western Australia, a divorce order will not usually revoke all of your Will but it will in most instances revoke any appointments (executor, beneficiary, trustee) or clauses under the Will which refer to your former spouse. Therefore, if you had for instance appointed your spouse to act as your executor or you named them as a beneficiary, they will no longer be able to act as your executor, nor will they receive any gifts you left them, following a legal divorce.

However, it should be noted that if your Will was not updated following your divorce and you die, there can still be some exceptions to consider where the court may not revoke part of the Will and decide in favour of your former spouse if they can be convinced you clearly intended for a specific clause to still relate to a former spouse. The court will often also decide in favour of your former spouse if you have appointed them to as at the trustee of property you have left to your children as beneficiaries under the Will.

it is therefore highly recommend you update your Will to avoid any confusion, misinterpretation by the court, conflict or loss of intent. Get legal assistance.

Why have an Enduring Power of Attorney?

An Enduring Power of Attorney (EPA), is also a very important legal document as it allows you to appoint someone you really trust to legally act on your behalf, if you lose your mental capacity or ability to communicate. The EPA can make decisions about your personal matters, your health (including support services, treatments and health care, where and with whom you live), your finances (including paying expenses and taxes, making investments, collecting your income, selling property, carrying on a business etc). This is especially important in situations if you were unfortunately incapacitated due to dementia, a stroke, brain injury, an illness, or an accident. You may also want to choose a primary power of attorney and also name a backup person in case the primary is unable to fuflil their duties.

You appoint an 'Attorney' under a EPA but that does not need to be a lawyer. You can select a relative, friend, professional person such as your accountant, or someone else you trust and believe to have the necessarily ability to carry out your wishes and manage your affairs. This person's decisions will have the same legal power as if you had made them yourself, so choose wisely.

We often recommend to our clients to clearly set out with their Will specific instructions to help the executor and/or guardian including:

o  what medical treatment you want to receive if you were to be incapacitated;

o where all your important family and financial documents are kept for the executor to access and contact details of any person they deal with including specific bank, finance, insurance, financial planner, financial advisor, stockbroker, accountant, lawyer;

o  a wish list - setting out your hopes for the children in the future (for example, if my finances permit I would like them to attend x school, have continued contact with relatives y and z, to continue being raised in x religion etc)

Why have an Advanced Health Directive?

Another useful document is an Advanced Health Directive.

At some point in the future, you may be unable to make decisions about your health care, even temporarily. This might be due to an accident, dementia, stroke or a mental illness.

An advance health directive allows you to:

• give directions about your future health care

• make your wishes known and give health professionals direction about the treatment you want

• appoint someone you trust (an attorney) to make decisions about health care on your behalf.

The best time to make an advance health directive is now, before any urgent health condition arises. However, it’s particularly important to make one if:

• you’re about to be admitted to hospital

• your medical condition is likely to affect your ability to make decisions

• you have a chronic medical condition that could cause serious complications (e.g. diabetes, asthma and heart or kidney disease).

Before you complete an advance health directive, you should:

• think about your views, wishes and preferences for your future health care

• talk to your family and friends

• talk to your doctor—they

  • will have access to your medical history

  • can help you understand how a particular illness may affect you

  • can discuss treatment options and the effects of those treatments

• if you plan to appoint an Enduring Power of Attorney for health matters, consider who you want to appoint and talk to them about it.

Ongoing review of your Will and Enduring Power of Attorney

Having updated your Will and Enduring Power of Attorney and had it appropriately witnessed, (and destroyed the original one) it is always good practice to review them annually (we always suggest around tax time as a good reminder) as unexpected life events can continue to have flow on effects to your Will and the need to potentially amend it (for example if anyone mentioned in the Will changes their name, the executor or guardian is no longer able to fulfil their obligations, a beneficiary under the WIll passes or their family situation changes, any specific item mentioned in the Will has now been sold/lost or has changed in nature, you become involved in a new business, company or trust or change your residence to another State or country).

We also recommend you regularly review where copies of your most current Will and Enduring Power of Attorney are stored - ideally in a safe custody box and the executor is aware of where a copy of the latest Will is kept.

As busy and potentially overwhelmed as you may be feeling, these documents are really important to consider. If you need assistance preparing any of these documents, please reach out to make an appointment with our Wills & Estates specialist to ensure you have accurately protected your assets and can fulfill your wishes through an affordable Wills & Estates Package.

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