A will takes effect when you die. It can cover things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you’d like donated to charities and even instructions about your funeral.
A will allows you to appoint who you want as the executor – that is the person who will administer the estate following your death.
Superannuation Death Benefit Nominations
If you die, your super fund trustee normally pays your death benefit to one or more of your dependants or to your estate. Most super funds let you nominate who you want your death benefit paid to, either as a non-binding or binding nomination. If you don’t nominate someone, the super fund trustee will decide who your money goes to. This can lead to delays and may cause fights in your family.
A testamentary trust is a trust set out in a will that only takes effect when the person who has created the will, dies. Testamentary trusts are usually set up to protect assets.
Here are some reasons why you would create a testamentary trust:
- The beneficiaries are minors (under 18 – 21 years old)
- The beneficiaries have diminished mental capacity
- You do not trust the beneficiary to use their inheritance wisely
- You do not want family assets split as part of a divorce settlement
- You do not want family assets to become part of bankruptcy proceedings
A trust will be administered by a trustee who is usually appointed in the will.
A trustee must look after the assets for the benefit of the beneficiaries until the trust expires.
The expiry date of a trust will be a specific date such as when a minor reaches a certain age or a beneficiary achieves a certain goal or milestone, like getting married or attaining a specific qualification.
Powers of Attorney
Appointing someone as your power of attorney gives them the legal authority to look after your affairs on your behalf.
The main types of powers of attorney are:
- A general power of attorney – where the appointment is for financial and legal decisions, usually for a specified period of time and automatically ending if the donor loses capacity.
- An enduring power of attorney – where the appointment is for financial and legal decisions and continues despite the donor losing the capacity to make decisions.
- A medical power of attorney or guardianship – where the appointment is for personal and medical decisions if the donor has lost capacity.