Succession planning checklist

There are a wide variety of events that should prompt you to review your succession plans: for example, the ageing of an executor appointed in your will; the arrival of children or grandchildren; the breakdown of a child’s marriage; the threat of some commercial misfortune to a child; the graduation of a child into a professional career; or a resolve to assist a needy charity.

You should think just as carefully about the possible onset of incapacity. Whilst your will deals with matters upon your death, it has no bearing on the onset of incapacity if that occurs.

These are some fundamentals to consider when reviewing your succession or incapacity plan:

1.  Enduring powers of attorney and guardianship

Have you considered who you would want to make financial, medical and lifestyle decisions for you if you were incapacitated due to illness or injury?

Powers of attorney and guardianship are legal documents that allow you to appoint someone to make financial, medical or lifestyle decisions on your behalf in the event of you being unable to make those decisions yourself.

Your spouse, children or next of kin do not have an automatic authority to make those decisions on your behalf. In the event that you become incapable, if you have not appointed attorneys or a guardian, your family members are likely to need to apply to the Victorian Civil and Administrative Tribunal (VCAT) to obtain the authority to make those decisions for you.

There are three main legal documents of this type which you should consider and update as necessary. They only operate while you are living and are:

• Enduring Power of Attorney (Financial): gives the person(s) you appoint power to manage your assets and finances. You can determine whether your attorney’s power commences immediately or on a specific date or occasion (ie. upon your mental incapacity). You can appoint one or more persons to be your attorney, and if you appoint more than one person you may specify whether the appointment is to be joint (where all attorneys must act together) or several (where any one of the attorneys can act on your behalf). Your attorney(s) must always act in your best interests.
  

• Enduring Power of Attorney (Medical): enables you to appoint a person to make decisions about health care and medical treatment on your behalf. The power only commences if you lose your capacity. You can only appoint one agent and one alternate agent. Your agent can consent to medical treatment, choose between different treatment options, refuse consent and withdraw treatment, including turning off life support systems, on your behalf. Your agent cannot refuse palliative care.
  

• Enduring Power of Guardianship: allows you to appoint a person to make health care and lifestyle decisions on your behalf, such as where you live and with whom, who can visit you and whether you should work. The power only commences if you have lost the capacity to make those decisions yourself. You can only appoint one person to be your guardian and one alternate guardian. You cannot appoint a person who provides you with professional care, treatment or accommodation.

2.  Testamentary Trust Wills

If there are intended beneficiaries of your estate who may benefit from asset protection, you should consider testamentary trust wills.

Those who may benefit from asset protection include an intended beneficiary in an occupation which carries a risk of being sued (ie. accountants or doctors) or an intended beneficiary who might be in an unstable marriage or relationship. 

Rather than leaving your assets directly to beneficiaries, testamentary trust wills give your assets to a discretionary trust, for the potential benefit of the intended beneficiaries and their families. The testamentary trust is established upon your death. Testamentary trust wills can also provide taxation advantages.

 Special disability trusts should also be considered if you have intended beneficiaries with a severe disability. These trusts offer significant pension advantages to the beneficiary.

 3.  Superannuation Death Benefit Nominations

 Your superannuation benefits payable on death are not necessarily controlled by your will and require special treatment. The payment of your superannuation benefits upon your death is often controlled by a separate document called a Death Benefit Nomination.  

A death benefit nomination can be binding or non-binding and many lapse after a certain period. These nominations should be reviewed and updated regularly as part of your estate and succession planning. If you do not make a binding nomination, the trustee of your superannuation fund will determine to whom the death benefit is paid which may result in a different outcome to that which you intended or would have wished.

For more information and advice contact:

Sarah Cohen
Lawyer
Wills and Estates
T: 03 5226 8574
E: scohen@harwoodandrews.com.au