Managing your finances to meet your day-to-day requirements as well as your long-term goals can be a complex task.
From selling your property through to your executor selection, an estate plan helps direct the distribution and protection of your assets.
Just like any high performing sports team, an estate plan isn’t complete without all the team members in place to carry out your plans.
Understanding the roles and responsibilities of each member of your estate planning team may help you decide whose best to carry each role.
General Power of Attorney
If you want someone to make financial and legal decisions for you for a limited time when you are unavailable, you need to make a general power of attorney.
For example, if you are travelling overseas and need someone to take care of your property and finances while you are away you would have to give your chosen decision maker power of attorney.
This means banks and other authorities would follow their instructions. A general power of attorney becomes invalid if you become unwell and as a result are unable to make your own decisions.
Enduring Power of Attorney (Financial)
An enduring power of attorney (financial) is a legal document that authorises a person to make financial and legal decisions on your behalf. The enduring power of attorney (financial) can take effect immediately, on a specified day or occasion, or if and when you become incapacitated.
It can be used for temporary circumstances. However, because it is enduring, it will also automatically take effect if you become permanently incapacitated.
Enduring Power of Attorney (Medical Treatment)
An enduring power of attorney (medical treatment) is a legal document that authorises another person to make decisions about your medical care and treatment on your behalf.
The enduring power of attorney (medical treatment) takes effect if and when you become incapacitated.
The incapacity can be temporary, for example, due to a loss of consciousness after an accident. Or permanent, for example, due to dementia.
However, it does not take effect if your decision making capacity has been mildly reduced only briefly or mildly.
Enduring Power of Guardianship
An enduring power of guardianship is a legal document that authorises another person to make personal and lifestyle decisions on your behalf.
The guardianship takes effect if you become incapacitated. The incapacity can be temporary, for example due to injury. Or permanent, for example due to mental disability.
Executor of your Will
An executor’s responsibilities include the assets in your estate, paying your debts, and making distributions in accordance with the provisions of your will.
If you’ve set up a trust, a trustee is responsible for administering the trust according to the terms you’ve designated.
These responsibilities include, but are not limited to, managing the assets in the trust, making payments to the beneficiaries, and filing all necessary tax returns.
A trustee can be an individual or an institution.
It’s important to give careful consideration to each person you appoint for every role, and have a discussion with each individual. You may also consider assigning a neutral party as your executor or to serve as a trustee, especially in the case of longer term responsibilities.
Alternatively, you many feel strongly about enlisting family members for the responsibility. Either way, communication is key and make sure you have a thorough conversation.
As with anything to do with managing your finances, seeking professional advice from a financial planner is essential to create an effective estate plan.
There are many factors to consider such as taxation, legislation and protecting your wealth and assets. It is vital to seek the opinion of an estate planning expert before taking action.