Planning for the future: What do I need to know?
By Vanessa Ho
Most of us don’t want to think about the realities of ageing and death. In fact, most of us would rather live in hope that the Fountain of Eternal Youth is real.
The bad news is that unfortunately, it’s not. That being the case, it’s probably wise to face reality and start planning for the future. If something happens to you, you want to know that your loved ones will be looked after and will be able to manage your affairs with minimum difficulty. The good news is that there are some simple but important steps you can take right now to plan for the future.
:: Wills
A will is probably the most common document that is used to plan for the future. It is a legal document that sets out how a person would like their belongings to be dealt with after their death. It can also set out arrangements for the care of the person’s children.
A properly drafted will makes clear your wishes. It removes any potential problems that may arise if you happen to pass away intestate (which means that you haven’t set out your wishes in a will and you haven’t properly appointed anyone to distribute your estate). For similar reasons, it’s also important for your loved ones to have wills if they are aged 18 years or over.
A will is also really important in blended families to make sure that everyone gets everything to which they are fairly entitled.
A person should make a new will every time there is a significant change in their personal circumstances. For example, if they marry, separate or divorce, if a beneficiary dies, if they move house or even upon the birth of a child. It’s important to understand that if a person marries, all of their previous wills become invalid. This means that making a new will should be a top priority for a newlywed.
It’s not necessary to see a lawyer to have a will drafted, but there can be huge issues with drafting your own will, even if you use a will kit. The wording must be very specific and all wills must be signed and witnessed in a very particular way. Any errors could mean that a will is invalid which may mean that your belongings can’t be dealt with in the way you intended.
Not only can a lawyer ensure that all necessary requirements are met, they can also give you advice about how to structure your will and the likelihood that your will may be contested later on.
:: Powers of Attorney
A power of attorney (POA) is a legal document in which a person (the donor) can appoint someone (the attorney) to make financial and legal decisions on their behalf. Typically, a POA is used if a person is going overseas and needs someone else to manage their finances and pay their bills while they are gone (this is known as a general POA). It can also be used if a person is too sick or incapacitated to deal with their own legal and financial affairs (this is known as an enduring POA).
Attorneys are legally obliged to act in the best interests of the donor and they must keep proper records of everything they do as attorney. There are penalties that apply if the attorney fails to do so.
It’s not necessary to see a lawyer to have a POA drafted, but it’s a good idea to do so to make sure that it’s done properly and to get some advice on how the document operates and the powers that are given to the attorney.
For convenience, POA documents are often drafted at the same time as wills.
:: Advance Care Directives
An Advance Care Directive (ACD) is a legal document that provides guidelines about what medical decisions and living or care arrangements a person would like to be made on their behalf, if they are later unable to make those decisions for themselves.
For example, if a person has a life threatening medical condition, their ACD may say that they don’t wish to be resuscitated if their heart stops beating or if they stop breathing.
It is a document that tries to set out who you are, your values, your beliefs and your frame of mind and attitude towards medical care and lifestyle so that future decisions that need to be made can be guided by your directions set out in your ACD.
The difference between an ACD and a POA is that the ACD document deals with medical and lifestyle decisions, whilst a POA document deals with legal and financial decisions. The ACD is only effective when the person who made the ACD loses capacity. That is, when medical practitioners are of the view that they can no longer make decisions for themselves.
You can appoint a decision maker in the ACD, although this isn’t mandatory. That decision maker is then legally obliged to make decisions as if they were in your shoes. They must follow the guidelines and wishes set out in your ACD.
You can draft your own ACD, although we recommend seeing a lawyer. Seeing a lawyer may be helpful because they can discuss things with you that you may not have even considered.
There’s no doubt that a bit of forward planning can make life a lot simpler for your loved ones. It will be much easier for them to deal with your medical, personal and financial wishes if you have set out your intentions somewhere. Giving your substitute decision makers and attorneys written guidance can help to reassure you that they will follow your wishes. You are also providing them with assurance that they will be making the right decisions by you.
It makes good sense to have a valid will, POA and ACD. And if the elusive Fountain of Eternal Youth is ever found, you’ve at least set up some contingency measures, just in case the pristine waters don’t work their magic.
This article provides general information only. For advice specific to your needs, you should consult a lawyer.
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