The importance of a will and a power of attorneyby Wealth Architects / 26.09.2018
It’s a morbid thought that many of us tend to shy away from, but end-of-life financial planning is a crucial stage in any successful financial management plan.
One day down the track you’ll no longer be around to use or take care of your assets.
It’s an unfortunate, but certain, fact of life.
But that doesn’t mean that everything you’ve accumulated can’t still benefit the people or causes you care about.
To maximise the chances of this happening in the smoothest way possible it’s important to establish a well thought-out will, a trusted power of attorney, and a nominated beneficiary – all of which we’ll touch upon below.
What is a will?
A will is a legally binding document that states how you wish your assets to be distributed. It can stipulate who should look after your young children, any trusts you’d like established, donations you’d like to give to charity, and your funeral and burial wishes.
It’s fair to say that wills are a little more complicated to draw up than scribbling down a bunch of instructions on the back of a napkin. Thus it’s always worth taking a co-ordinated approach to formulating your will with the help of a solicitor, accountant and a financial adviser.
What is a power of attorney?
A power of attorney is an individual who you wish to be responsible for managing, or partially managing your affairs, when you’re unable to do so.
The powers that your legal appointee can exercise vary between state and territory, but they can include being able to make financial decisions, medical decisions and legal decisions on your behalf.
If you’d like to give this trusted individual a bit more guidance you can get additional legal documents, such as an advanced healthcare directive, drawn up.
What is a beneficiary nomination?
A nominated beneficiary is an individual, institution, charity or similar organisation you wish to leave your superannuation to.
This could be your spouse, your children, or even your local dog shelter – it’s up to you!
But it’s important to note that if you do not make a binding nomination, your superannuation fund trustee will decide who your money goes to, which can lead to lengthy delays or family disputes.
Why this is all important
The money and assets you leave behind can form a cherished legacy or spark legal issues that tear your family apart.
The way in which your assets are passed on can have considerable tax implications, which can inadvertently disadvantage your beneficiaries if you haven’t thought them through.
And if you haven’t even got so far as establishing a valid will (and die intestate) your assets, bills and taxes will be distributed by a court-appointed administrator.
None of us knows how long we have left, which is why it’s important to ensure that your financial affairs are in order while you’re still able to attend to them.
Ensuring that your financial affairs will be managed in line with your wishes and disposed of as you intend is important to many people.
Setting up a will, a suitable power of attorney, and a nominated beneficiary now minimises the risk of your wishes being ignored or overridden later.
How to get started
Setting up appropriate arrangements for the management of your financial affairs when you’re no longer around is thankfully easier to do than you may think.
We can outline the various options which are open to you, as well as suggest cost-effective methods of making sure that the right legal framework is in place in good time.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.