Over the years we have heard many different reasons about why people don’t make or update their estate planning documents such as:
- My affairs aren’t that complicated;
- Everyone knows what they are getting;
- My kids will look after things if I lose capacity;
- I’m sure my family will figure it out; and
- I don’t plan on dying any time soon.
By far the most common is:
- I don’t have that much.
This is particularly the case with young adults who have often just finished high school or university and are yet to purchase a house or start a family.
But on closer inspection there are some important things that, regardless of age or income, you need to be prepared for.
Loss of capacity
A common misconception in estate planning is that if you are younger, you don’t need to worry about losing capacity. Likewise, many people believe that if something were to happen to them, their family could easily resolve it. In reality, however, this is not the case.
Accidents can happen to anyone without warning. When they do, having someone to look after your financial and legal affairs whilst you are incapacitated can bring significant relief to an otherwise stressful situation.
An enduring power of attorney document appoints someone to make legal and financial decisions on your behalf should you be unable to do so for yourself. Common tasks that an enduring power of attorney looks after include paying bills, dealing with your service providers (e.g.; phone and credit card companies) and monitoring superannuation and bank accounts. Parents and other close family members are not authorised to make these decisions on your behalf unless they have been made your power of attorney.
In order to gain the benefit of an enduring power of attorney, however, you must have the right document in place while you still have capacity. If you should suddenly lose capacity (e.g. you are involved in a serious car accident) you can no longer appoint an attorney. If someone wished to take over your legal affairs at this time, they would be forced to apply to the NSW Civil and Administrative Tribunal so that they could be appointed, adding to an already stressful time for you and your family.
Like an enduring power of attorney, an enduring guardian is someone who looks after your health and lifestyle choices if you are unable to do so yourself. An individual who is appointed as your enduring guardian is the key person that doctors and other staff will liaise with when making decisions for you and overrules the requests of anyone else (including close family).
An enduring guardian document can also provide instructions to loved ones on what treatment you would like to receive in extreme circumstances around issues such as life support. This can provide great relief and guidance to your family at an otherwise stressful time.
Time to act
No one is bulletproof. Accidents can happen at any time and by then it may be too late to get your affairs in order. Having an effective enduring power of attorney and enduring guardian in place now can prevent significant problems in the future for you and your loved ones.