3 Documents you need in your life
“It is a common misconception that Super is paid in accordance with a persons Will but often this isn’t the case”
Singer and actress Reba McEntire said that to succeed in life, you need three things: a wishbone, a backbone and a funny bone. There is a lot of truth in this sentiment, particularly for lawyers, but ask an Estate lawyer they’ll tell you that to ensure your family and your assets are protected you need a Will, Enduring Power of Attorney (EPOA) and a Binding Death Nomination.
THE 3 DOCUMENTS EVERYONE SHOULD HAVE
1. Wills
You’re working hard to build your assets so protect them! Having a valid Will ensures your property goes where you want it to go. How your Will is structured, who is appointed as your trustees, how your estate gets distributed and who is appointed guardians for any children are all decisions that you should be making. Otherwise, without a valid Will, some complicated and arbitrary rules of intestacy will determine what happens to your Estate and the additional legal fees can quickly erode it!
2. Enduring Power of Attorney (EPOA)
So technically an EPOA is a document that comes into operation while you are still alive – meaning the heading for this blog should be “3 documents you need in your life – in case of you death (or you are incapacitated) - but that heading is no where near as catchy.
Even if something terrible happens that means you permanently or temporarily can’t decisions for yourself there is not automatic assumption you can’t pay your bills. What happens if you lose capacity to make financial decisions? Who can access your money to pay your bills? An EPOA is like an insurance policy. It’s is the document that appoints someone with the authority to make financial and personal health decisions on your behalf if you become incapable.
EPOA’s are not just for the elderly or the sick. No one plans to be temporarily sick or injured but, it happens. Without an EPOA your family may have to apply to QCAT to make financial decisions for you. No one wants that at an already distressing time. Further, if you’re a member of a SMSF it’s imperative you have EPOA. If a member of an SMSF becomes incapacitated for a period exceeding six months, the fund will fail the definition of an SMSF and its assets will lapse into the normal tax regime. Yikes!
3. Binding Death Benefit Nomination (“BDBN”)
Other than the family home, a person’s superannuation benefit is usually their largest asset, so if you were to pass away you want to make sure this benefit goes where you want it to go. A BDBN is a written direction to the Trustee of your Superfund setting out who receives your super benefit and in what shares, on your death. A BDBN can be lapsing or non-lapsing. Lapsing nominations usually expire every three (3) years unless renewed, whereas non-lapsing nominations never expire.
It is a common misconception that Super is paid in accordance with a persons Will but often this isn’t the case. If you don’t have a BDBN in place or it’s lapsed the Trustee of your Superfund will generally have the discretion to distribute your super benefit as they see fit – this means it may not go where you want it to go. The other benefit of a BDBN is that the super is usually paid to the beneficiary a lot quicker and the payment to the nominated beneficiary cannot be challenged.
You’re working hard for your money so make sure its properly protected. Proper estate documents are an insurance plan that ensure your family and your assets are safe. If you need Succession Planning advice, have some Estate documents in place and would like them reviewed for free or simply want more info, come and see us.
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