What Happens Next? Estate Planning and Powers of Attorney
Nobody likes to think about getting older but it happens to all of us. The better we plan for it, the more comfortable we are likely to be in our old age, and the better our loved ones will be provided for after we’ve gone.
However, it can be daunting trying to make the best plans for the future. What happens if you reach a time in your life when you are no longer capable of making important legal and financial decisions for yourself? Here are a few things it’s worth taking into consideration to plan for your old age and beyond.
Make an Estate Plan
An Estate Plan sets out your instructions for what you want to happen to all your assets after your death. Anyone aged over 18 and mentally competent can make an Estate Plan. It includes various legal documents including your will, and any other documents relating to how you want your finances and assets distributed. It also includes any Powers of Attorney you have put in place in case you are ever incapable of making important financial, legal and medical decisions for yourself.
General and Enduring Powers of Attorney: What’s the Difference?
Powers of Attorney are legal documents that allow you to give someone else of your choice the legal authority to make some of your decisions on your behalf. There are two main types of Power of Attorney:
1. General Power of Attorney
This usually applies earlier in life. It allows you to nominate someone to make your legal and financial decisions for you for a specific period of time, such as if you know you are going to be out of the country for a while. A General Power of Attorney does not allow your nominated person to make medical, personal or lifestyle decisions on your behalf. If you suddenly become too ill or incapacitated to make your own decisions while a General Power of Attorney is in place, that Power of Attorney ceases to be valid.
2. Enduring Power of Attorney
This allows you to nominate someone to make legal and financial decisions for you in a situation where you are no longer capable of making them for yourself, usually through severe illness in old age. In Australia, different states and territories have different rules about which powers you are able to grant under an Enduring Power of Attorney. It’s vital to check what the regulations are where you live.
For example, some states allow an Enduring Power of Attorney to cover decisions about your medical care, whereas other states require an Enduring Power of Guardianship in addition.
Who should you give Powers of Attorney to?
The person you choose does not have to be a lawyer; it can be a friend or family member, or anyone else of your choosing. It should be someone you trust and who you are sure will always have your best interests at heart. Ideally, they should also be reliable and financially astute.
What to do next?
If you are thinking of making an Estate Plan or granting Powers of Attorney, it is always advisable to get legal advice or some advice from your Financial Adviser before having any legally binding document drawn up. It’s never pleasant having to think about getting older, but the better plans you make now, the less you will have to worry about in the future.