What is an estate plan?
An estate plan is more than a will. It can also include two other key legal documents that name who make decisions for you, when you cannot.
Power of Attorney names who can make decisions about your financial affairs. It includes every day money issues like accessing your bank accounts and paying bills and expenses, to the bigger decisions like buying and selling real estate, assets and investments.
You can also choose when the Power of Attorney comes into effect, such as when you are unable to make decisions for yourself. Power of Attorney can be held by a person, a group of people, or an entity like a trustee or a lawyer.
The other document is known by a few names - an enduring guardianship, guardianship orders, an advanced health directive or medical care directive. This document names who can make medical, health and lifestyle decisions on your behalf if you’re still alive but incapacitated because of illness or injury. It can also record your specific directions, like what happens if you need ongoing health care or palliative care.
In this article we focus on the importance of a power of attorney and address common concerns people have.
Power of attorney and guardianship definitions and rules are different in each state. Each has their own prescribed forms to be legally recognised, so it’s a good idea to check. For instance, in QLD and ACT, a Power of Attorney also extends to making decisions about medical, personal or lifestyle affairs. In Victoria personal and lifestyle affairs may be covered by Power of Attorney but medical decisions are not.
One rule that does apply everywhere - only you can appoint a power of attorney or perpetual guardian for yourself. No one else can do that for you, or change it for you, just as you cannot do so for someone else. A medical professional is the only personal that can determine if you are unable to make decisions – an attorney or your family are not able to determine that for you. Your appointed attorney is also unable to make changes to your will, or to the beneficiaries nominated in your super.
A common belief is that being 'next-of-kin' provides enough authority to act on a person’s behalf. But Michelle says that assumption is incorrect.
“Everything just freezes. It stops… it comes back to privacy and confidentiality.” explains Michelle. “If there’s no power of attorney in place then there needs to be an order from a civil and administrative tribunal, which is a state or territory government entity. That's the ultimate legal authority required to be able to make enquiries and transact on your behalf.”