After years of hard work, you are finally looking forward to reaping the rewards and enjoying your retirement. With some good planning, you could have a nest egg that will see you through your retirement.

But, are you forgetting something? It’s an unfortunate fact that almost half of all Australians do not have a will.1 

If you are one of them, you may not be aware of the potential consequences for your estate and your family, particularly those who depend on you financially.

Why you need a will

If you die without a valid will, you have no control over how your estate is distributed, and it may even end up in the hands of someone you didn’t want it to. Also of concern, your dependants may be inadequately provided for. The process of dividing your estate can become stressful and time consuming, and may even result in legal disputes between family members and loved ones.

By drawing up a will, you get to decide what happens to your savings and other assets – helping ensure that your loved ones are looked after when you are gone.

How to make a will

The good news is, making a will can be easy. A solicitor or trustee can draw up a will for you, for a fee, and you can change your will whenever you wish during your lifetime. It’s very important to keep your will up to date through major life events – for example if you get married or divorced, have children or grandchildren, sell or acquire assets or if one of your beneficiaries or executors die.

What is Power of Attorney and Guardianship?

While it’s an important consideration at any age, as you approach retirement, it is timely to start thinking about what would happen if you had an accident or suddenly became ill. If you were no longer able to make important decisions for yourself, who would make these decisions on your behalf, and look after your affairs? This is where a Power of Attorney (POA) comes in.

When you appoint someone as your Attorney under a POA, they have the legal authority to make some decisions on your behalf. While laws and types of POA differ from state to state, there are generally three types of POA which exist across Australia:

  • A general power of attorney: gives your attorney the right to make financial and legal decisions for you while the POA remains valid, or if more suitable, for a specific period of time (for example, when you are overseas). A general POA will cease to be valid if you lose mental capacity (for example, because of a critical illness or decline in mental health).
  • An enduring power of attorney: gives your attorney the right to also make financial and legal decisions for you when you lose the ability to do so yourself, and this power can continue to be valid in the event that you do lose mental capacity.
  • A medical power of attorney: gives your attorney the right to make decisions about your health and medical treatment if you are unable to do so, for example because you become gravely ill.

In choosing who will have Power of Attorney, there are many things that you need to carefully consider, including:

  • Whether the person is trustworthy
  • Whether the attorney will act in accordance with your wishes, and
  • How likely they are to be present in a time of crisis.

Some states allow for the establishment of an ‘Enduring Power of Guardianship’, which grants authority for a person to make medical and lifestyle decisions on your behalf, when you can no longer do so. This may include decisions about where you will live, the types of medical care or treatment you will receive, and other decisions about your general welfare.

Making the right financial decisions about your estate and powers of attorney can be hard on your own — and remember that if a will isn’t drawn up correctly, it is considered invalid. So it’s worth getting professional advice. To find out more about writing a will or planning your estate, speak to us today on 03 8651 6555.

1. MoneySmart Online, ‘Wills and powers of attorney’, by ASIC