Estate Planning and Legal Decision-Making

Estate planning is crucial to protect your assets, ensure your wishes are followed, and prevent legal issues for your loved ones. You may not have close family in Australia, making it even more important to plan.

Key documents include:

  • Estate planning documents (managing assets after death)
    • Will – A legal document that outlines how a person’s assets and belongings will be distributed after their death. It can also include guardianship arrangements for children.
    • Testamentary Trust – A trust created through a will to manage and protect assets for beneficiaries (e.g., children or dependants). It provides long-term control over assets and can offer tax benefits and protection for vulnerable beneficiaries.
  • Legal decision-making documents (managing affairs while alive)
    • Power of Attorney (Financial and Legal) – Authorises someone to make financial and legal decisions on behalf of another person.
    • Enduring Power of Attorney – Continues to be valid even if the person loses mental capacity.
    • Medical Power of Attorney / Advanced Care Directive – Allows someone to make healthcare and medical treatment decisions if the person becomes unable to do so.

1. Wills – Decide who gets your assets

A will is a legal document that says who gets your money, property, and belongings when you die. If you have children, it can also say who should take care of them.

a. Why is a will important?

  • You decide who gets what – Without a will, the law decides how your assets are divided, which may not be what you want.
  • It makes things easier for your family – A clear will reduces stress, confusion, and family disputes after your death.
  • You can choose a guardian for your children – If you have kids under 18, a will lets you name a trusted person to care for them.
  • It helps avoid delays – Without a will, legal processes take longer and can be costly for your loved ones.
  • You can support causes you care about – A will lets you leave money or assets to charities or organisations important to you.

b. Additional considerations

  • Assets overseas: If you have assets in your home country, consider creating a separate Will for those assets, as laws vary by jurisdiction.
  • Foreign beneficiaries: If you plan to leave assets to beneficiaries living outside Australia, be aware of the Foreign Investment Review Board (FIRB) requirements for certain assets.
  • Seeking legal advice: Consult with a legal professional to ensure your documents comply with Australian laws and reflect your wishes accurately.

c. What happens if you die without a will?

  • The government follows a set formula to decide who gets your assets.
  • Your money might not go where you want.
  • If you have no close family, your assets could go to the government.
  • Family members may need to go to court, which takes time and money.

2. Financial power of attorney

A financial power of attorney is a legal document that lets you choose someone you trust to manage your money and property if you can’t (but you are still alive). This could be due to illness, injury, or being unable to handle your finances (for example, if you’re overseas or lose mental capacity).

a. Why is it important?

  • Someone you trust is in charge – You choose who will make financial decisions for you, instead of leaving it to the courts or government.
  • Your bills and finances stay under control – Your attorney can pay your bills, manage your bank accounts, and look after your property if you can’t.
  • It avoids delays and legal trouble – Without a financial power of attorney, your family may need to go to court to get permission to manage your finances.
  • It helps in emergencies – If you have an accident or become seriously ill, your attorney can act quickly to handle your money and financial responsibilities.
  • You stay in control – You decide who can make decisions and what they can do, such as buying or selling property, accessing bank accounts, or handling investments.

b. What happens if you don’t have one?

  • No one can automatically step in to manage your finances.
  • Your family may have to apply to a tribunal or court, which takes time, money, and effort.
  • Your bills may go unpaid, and financial decisions may be delayed.

A financial power of attorney gives you peace of mind knowing your finances will be handled properly if you can’t do it yourself. It’s a simple document that can make a big difference in protecting your future.

3. Medical power of attorney

A medical power of attorney is a legal document that lets you choose someone to make medical decisions for you if you can’t (but you are still alive).

a. Why is it important?

  • You stay in control – You choose who will make medical decisions for you, instead of leaving it to doctors or the government.
  • Your wishes are followed – Your chosen person can make sure your medical treatment aligns with your values and beliefs.
  • It avoids confusion and family disputes – If something happens to you, family members might disagree about your treatment. A medical power of attorney makes your wishes clear.
  • It helps in emergencies – If you are in an accident, unconscious, or too sick to make decisions, your medical attorney can act quickly to get you the right care.
  • It works with an Advance Care Directive – You can also write down specific medical wishes (e.g., life support or pain relief) so your medical attorney knows what you want.

b. What happens if you don’t have one?

  • The law decides who makes medical decisions for you, which may not be the person you would choose.
  • Your family might have to go to a tribunal to get permission, which can be stressful and take time.
  • Medical staff may make decisions based on standard procedures rather than your personal preferences.

A medical power of attorney gives you peace of mind knowing that someone you trust will make the best decisions for your health if you are unable to.

4. Guardianship power of attorney (especially if you have no will and family and small children)

A guardianship power of attorney (often called a legal guardian appointment or enduring guardianship) lets you choose someone to make personal and lifestyle decisions for you if you can’t. This includes where you live, your daily care, and who looks after your children if something happens to you.

a. Why is it important?

  • Your children will be cared for – If you are unable to care for them due to illness, accident, or death, your chosen guardian can step in without legal delays.
  • You choose who makes decisions for you – Without a guardian in place, government authorities may decide where you live and who looks after your children.
  • It prevents court or government involvement – If you have no family in Australia, a tribunal may have to decide who will take care of you and your children, which can take time and cause stress.
  • It ensures your values and preferences are followed – Your chosen guardian will respect your wishes about how your children are raised and where you receive care if you become unable to decide for yourself.
  • It helps in emergencies – If you are suddenly hospitalised or unable to communicate, your guardian can make immediate decisions for your wellbeing and your children’s care.

b. What happens if you don’t have one?

  • If you have small children and no family in Australia, the government may step in to determine temporary care until a formal guardian is appointed.
  • If you lose the ability to make decisions (e.g., due to serious illness or injury), a court may need to appoint someone to make choices for you, which could take weeks or months.
  • Your children could end up in state care while legal processes take place.

A guardianship power of attorney protects you and your children by ensuring that someone you trust is legally allowed to make important decisions on your behalf. It’s a crucial step for anyone without immediate family support in Australia.

5. Key differences between a will and a power of attorney

Understanding the differences between a Will and a Power of Attorney is crucial for effective estate planning. Here are the key distinctions:

a. Purpose and timing

  • Will: A Will is a legal document that outlines how your assets will be distributed after your death. It only takes effect upon your passing or death.
  • Power of Attorney (POA): A POA allows someone to make decisions on your behalf while you are alive. It can be used for financial, legal, or medical matters and remains valid until your death unless revoked.

b. Decision-making authority

  • Will: Appoints an Executor who manages the distribution of your estate according to your Will after your death.
  • Power of Attorney: Appoints an Attorney who makes decisions for you while you are alive, often in cases of mental incapacity.

c. Scope of authority

  • Will: Covers the distribution of assets, appointment of guardians for minor children, and funeral arrangements.
  • Power of Attorney: Can cover financial, legal, and medical decisions, depending on the type of POA.

d. Relevance to incapacity

  • Will: Does not address incapacity; it only applies after death.
  • Power of Attorney: Often used to manage affairs if you become incapacitated and cannot make decisions yourself.

e. Revocation and updates

  • Will: Can be updated or revoked by creating a new Will while you have mental capacity.
  • Power of Attorney: Can be revoked by the principal at any time, provided they have mental capacity.

In summary, a Will deals with post-death asset distribution, while a Power of Attorney manages affairs during your lifetime, particularly in cases of incapacity. Both documents are essential components of a comprehensive estate plan.

6. Preparing a will and power of attorney

Preparing a Will and Power of Attorney can be cost-effective and straightforward with the right resources. Here are some options:

a. Free services

  • Community legal centres: These centres offer free legal advice and assistance.
  • Legal Aid: Legal Aid services in each state provide free or low-cost legal assistance. While they primarily focus on urgent legal matters, they can guide you on where to find resources for estate planning.

b. DIY Legal Kits

  • Government agencies: Some state governments provide DIY kits or forms for Powers of Attorney.
  • Reputable sources:
    • Australian Government Websites: The Australian Government’s Attorney-General’s Department website often provides information and resources on estate planning.
    • State Government Websites: Each state’s government website offers specific forms and guidelines for creating a Will and Power of Attorney.
    • Law Societies: Law societies in each state, like the Law Society of NSW, offer free initial consultations with lawyers, which can help you understand the process9.

c. Affordable options

  • Public trustees: Public Trustees in each state offer affordable services for creating Wills and Powers of Attorney. They can provide professional assistance at a lower cost than private lawyers.
  • Online legal platforms: Some online platforms offer DIY legal kits for Wills and Powers of Attorney. These kits are generally inexpensive but ensure they comply with Australian laws.

d. Tips for new migrants

  • Consult local resources: Use local community legal centres and government websites for specific advice tailored to your state or territory.
  • Language support: If English is not your first language, look for services that offer multilingual support.
  • Seek Professional Advice: While DIY kits are cost-effective, consider consulting a lawyer if your situation is complex or you have significant assets.

7. Useful links

Here are some government websites in Australia that provide information, templates, or DIY legal kits for Wills and Powers of Attorney:

It’s advisable to have any DIY documents reviewed by a legal professional to ensure they are valid and meet your specific needs.

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