Making a plan is one of the most practical ways we can safeguard the people we love.
In this episode, you’ll hear from Stacey Bell, a Wills and Estates lawyer with a checklist for everything.
Stacey guides us through many of the legal documents, decisions, and conversations that can help families plan for the future and safeguard the people they love. Her presentation covers Wills, Trusts, Enduring Powers of Attorney, legal capacity, advance care planning, and the importance of putting your wishes in writing.
She also explains why estate planning is not only about what happens after we die. It is also about choosing the right people to make decisions, reducing uncertainty, and creating a plan that can protect your family today, next week and in 20 years’ time.
Meet Stacey Bell
Stacey Bell is a Wills and Estates lawyer with a practical, thoughtful approach to helping families plan, protect their wishes and safeguard the people they love.
Transcription
Please note that the transcription provided may contain occasional errors.
Hi, my name is Stacey. I am a Wills and Estates lawyer who happens to have an unhealthy obsession with death as a kid, and I’ve somehow managed to make it something that is worthwhile talking about to other people now. I started my legal career in personal injury, where dealing with people who had gone through very significant and life-changing events, and that formed an initial view of how we could well safeguard money for people, but also watching people going from having what the legal industry would call full capacity down to having lost it or reduced capacity.
So, that really informed how I saw the legal industry.
I did a lot of medical negligence as a young paralegal, and when I was presented with the opportunity to go into Wills and Estates and help people create a support network, that it would avoid the lack of advocates in that medical negligence context, like, well, why wait for the damage to happen? Let’s skip a few steps.
So, I’m a big sister to someone with a disability, I’m also a little sister, but I’m a daughter and an aunt. But I just happened to be a lawyer between 9 and 5 and give or take at parties when someone says something stupid.
If you ever work with me, I’ll be the first to tell you that I am a control freak and a professional catastrophiser. And so when we’re talking about Estate planning, what I’m always talking about is, you know, I understand that that’s the plan. What if that doesn’t work? And what if that doesn’t work? And what if that doesn’t work? And usually my clients are the ones that will stop me from going further than that.
But I’m always thinking this is going to go wrong. How do I stop it? It makes me very good at my job, drives my husband up the wall.
So, trust the lawyer to have a disclaimer, but I’m a lawyer, but I’m not your lawyer, so anything that I’m talking about today is general in nature. It’s not tailored to anyone’s specific circumstances, and it doesn’t take into consideration anything in particular. This is just all the cool things that I wish I could tell people at parties, but for some reason people don’t think that’s fun to talk about.
So, what? What is Estate planning? Now, this is a really big umbrella term that really encompasses just everything from discussions with family, managing expectations, but also talks about the actual formal legal documents that go into creating your Estate plan. Now, that can be everything from the bare minimum of having a Will, or it could be an Enduring Power of Attorney. It could be advance care plans, but it could also be a parenting plan. Love letters to your family if you’re not around anymore.
I’ve got some very interesting stories of where my clients have used this opportunity for one last attempt at emotional blackmail of their children, but to each their own. But it’s really from planning, from everything from your incapacity or your death to the legal side of things, of probate and the lawyers and titles on properties and taxes, but also down to who are you comfortable cleaning out your room and all the things in the bottom drawer that you don’t talk about. Who is your go-to person to clean that out so no one else sees them?
In this context, we talk about like there are two things that are certain in life, and that’s death and taxes. And we talk. We do a lot of talking about taxes. We do it at least once a year. But there’s a big reticence about talking about death because it’s uncomfortable. We don’t know what happens. And then there’s also that element of delegating control and a lot of people that make them very uncomfortable.
But I will try to make this as lighthearted as possible, because it is not a particularly fun topic, but it’s the whole point of why we’re here today, of how do we safeguard not only your family members, but also you. You are a key part of this safeguarding plan, and we need to make sure that you’re taking care of, to take care of them.
In a lot of cases, you don’t really know what you do want or you don’t know what’s available to you, but you will know what you don’t want and what is a completely unacceptable outcome for your family and your family member with a disability. And how I generally approach the Estate planning conversation is we’ll talk about the basics of who’s who in the zoo. What does your family look like, what assets are we working with? But then I’ll start the conversation about who are we working for, what are we concerned about?
And usually there’s someone or something that we’re working against. And that’s where I come in from there. And I start talking about how we can structure your documents, whatever the combination of those that might be, to make sure that your wishes are going to be respected and documented enough to be able to be actioned later, you’ll have to bear with me. I’ve rewritten parts of my talk today based on the questions that have come up.
But I thought I would start with in terms of what legal capacity is in terms of how someone can make a Will. The first thing is, as Helen was talking about earlier, everyone over the age of 18 is assumed to have capacity, legal capacity until we think there are reasonable grounds for us to believe otherwise. And even then, even if there’s not medical capacity, a lawyer can still have a different opinion.
So, the legal test for capacity is very different to the medical or social definitions of capacity. Now in some of the wordings I’ll be giving you later, capacity is, by design used as a vague term because it means something different to everyone, and what one person has capacity for is very different to what someone else might have capacity for. But in general, capacity is capacity to give consent or to do a task. But what that really means in a legal context is you understand the question that’s being asked of you. You understand the consequences of making that decision, and you understand what you have decided against in making that decision. And to anyone that might, depending on the questions being asked of you, you might not know the answer might, much like someone with a disability, might not be able to appreciate the consequences of that decision.
So, capacity is always decision specific. You might have it for some things, but not for others. So, that’s a really important distinction. Now there are different types of capacity, which is also very important to realise when we’re talking about testamentary capacity. But there’s loss capacity nil and preemptive. And just helps practitioners define either if you ever had capacity or if you had it and lost it, or if you have not yet attained it because you’re not 18 yet.
Now full legal capacity is what everyone is presumed to have until I have grounds to think that you don’t understand what I’m saying, or I don’t understand you, or whether there’s things that we need to work around in terms of what testamentary capacity looks like – it’s again, different to capacity to consent or capacity to understand a task.
A lot of the testamentary capacity definitions were written almost 100 years ago. So, I’ve changed what it actually says. But bear with me. But in order to make a Will, someone has to have the capacity to understand the nature and consequences of making a Will.
So, what is a Will? What will it do? You also have to understand the extent of the assets that you have available to you to dispose in the Will, you need to understand who might have moral and legal claims on your Estate, and you have to have the absence of mental disorders or delusions which affect the testator’s mental faculties. On top of all of that, the document that you end up signing, you have to understand and approve of the content.
Now, in a lot of situations where there is no capacity issues whatsoever, I’ll have people who… well, my husband manages all the finances. I don’t know where our super is. That’s technically you don’t have testamentary capacity because you don’t understand the assets that you’re working with, but you can start asking questions, you know, bring up your phone, you know, when was your last statement? You can ask questions and you can establish testamentary capacity by supporting people, in fact finding about their own things or just asking the right questions. But that’s the basic threshold of how one can be allowed to make a Will.
Then from there, if it’s a particularly complicated document, like the more complicated the document, the more the people might have some questions about whether or not you understood what you were signing.
But in general, what we’re talking about in the context of Estate planning is we’re just talking about control mechanisms when we’re not around anymore to control those things.
In a lot of cases, it can be something as simple as who’s going to pick up the kids from school if they’re minors. In this context, if something happens to me. But it can also be if those children are minors, how are we going to appoint a testamentary guardian, which is different to a guardian appointed under the guardianship and financial management legislation?
Can also – the questions about how are we going to choose an executor? What is an executor? How is it different to a trustee? And so you’ll start realising that there are 60 billion different titles that people can have.
And a lot of cases, they’re all the same person or the same couple of people. A lot of what my job becomes is who is going to be calling the shots, and what hats are they going to be wearing. If I go back to Linda’s talk earlier, she had her executors, but she put in her caring committee into the Will. I’m not sure what that looks like, but I’d be keen to hear about it.
But you can design a plan that’s going to work around: if this happens, then do this. And that can be about yourself. That can be about others. It’s it’s going to be a very personal document. The one thing I always tell my clients is anything you put in the Will, everyone will see. Now, sometimes that is a weapon, but it is also a shield. In some cases, you’ll want everyone to know what the vision is for your Estate plan.
You will want to know what is important to you, but there are also things where you might not want to air someone’s private medical information in your Will, or you might not want to air the reason why you don’t talk to your sister anymore, for example. There are places for everything. It just comes down to putting them in the right spots.
So, start with Wills. So, in its purest form, a Will is a document that is signed, that contains testamentary intentions, and it has two witnesses, and everyone signed it with the intention of making it a legally binding document. And when you look at it in that format, it’s rather simple to make a Will.
And this is where I tell you that I’ve spent a very long time finding out how it’s very complicated to make a Will. So, the first thing is, why should you have a Will? And realistically, not having a Will is an Estate plan. You know, not having a plan is a plan. The reason that you’d want a Will is so that you can control who are going to be in those control positions when you’re not in that driver’s seat anymore.
All the states and territories have different versions of this legislation, but all of them will have some sort of formula which generally doesn’t reflect the situation or what you would want to happen. But if you die without a Will, each state and territory will have what’s called intestacy provisions. What should happen to the division of your property if you don’t have a Will?
Now, if there are blended family situations, this is usually disastrous in terms of managing for the spouse and any child of that person. Or it could be that someone who is not been involved in that person’s life at all is now suddenly entitled to half anything that person has just because of the biological relationship between those people.
So, more often than not, intestacy does not reflect what people’s intentions or wishes are, and those are the main reasons why you would want to make a Will doesn’t need to be a complicated one.
I will indulge a Will kit, but in most cases they only really appropriate for about a very small… I won’t put numbers, but a very small portion of the population because more often than not you’ll see there’s a simple Will… I disagree with that terminology in general, because I would never describe my family as simple. Even though the document might be simple, it is still a tailored document that reflects your intentions.
But it might be basic in the sense that it doesn’t have any fancy clauses in it. But a simple Will is there’s more to just the document itself.
Now, what does a valid Will look like now? I walked you through the basics of the two witnesses and in writing, but it also needs to have an executor, ideally 1 or 2 spares, because you always want someone in that role.
And knowing I’ll walk you through what an executor does shortly. But knowing that is the most single, most important part of your Estate plan is the choosing the right executor. You need to have if not that person, then who? You’re going to get that a lot. If not that, then what? So, a valid Will needs to have enough executors that you’re going to play a little odd game of chicken with in terms of who’s going to die first. That is just a fact of that matter.
Now, I hear a lot of feedback that people don’t want to appoint their parents, for example, because they’re getting older and they might not want to, you know, they might not be around. And that is completely valid feedback. But sometimes that’s all you’ve got at the time. And until you’ve got a better option, again, you’re safeguarding as the best worst case scenario for your loved ones.
In terms of what should go in your Will, you have to appoint an executor. You have to deal with the whole of your Estate, and ideally, you have some sort of indication that you have revoked any awkward text messages that you’ve sent at 2am to your friends about what your intentions might be, and that’s the basics.
But from there, what should be in there is your end of life wishes, in terms of whether you would like to be buried or cremated and all those personal decisions for you, but also if there is any clauses that need to be in there to guide how your executor and what decision, what decisions you’re executor is going to make when they’re acting as your executor. You might hear executor and administrator or legal personal representative… Again, there’s more terms for all the same person.
They’re all the same individual person is just how you end up in that role. An executor is appointed by Will. An administrator seeks appointment where there is no Will, based on their eligibility to be in that role. And depending on who is available and how that consent happens, it might be someone that you’ve not spoken to in a very long time, but again, that you share that biological relationship with, and they were the next best thing.
In terms of where your Will should be kept, regardless of what is in it, who is appointed, what it does. If you cannot find the original when the time comes, you might as well not have a Will, because the whole point of having a Will is to make it easier for your family to administer your Estate in accordance with its terms.
But if you cannot find the original you, then you have to apply for probate on the basis of a copy Will. You also have to prove to the court that you haven’t revoked it? And if you were the last person to have it, for example, the starting point is the court will say that person revoked or destroyed it with the intention of revoking it, and you have to prove a negative. So, you’re already up the river with that, you’re missing a couple paddles.
And then on top of that, if you’re also applying on the basis of a copy Will you then have to prove that there wasn’t one later that you hadn’t destroyed with the intention of revoking it? So, it’s really important to keep those very important documents safe.
And what I will say is most law firms or professional services will offer to keep your documents for you, and it is very much for it’s a mutually beneficial relationship. We will store it for you because then when the time comes, you have to come to us and we can at least pitch our services and or provide certified copies. But this bonus to you is if we lose it, all of the cost of the copy Will and the revocation… that’s now our cost to fix.
So, sometimes it’s an inadvertent little insurance policy, but it doesn’t matter where it is as long as it’s safe. That’s that’s the big thing. The one thing I will add is if someone is charging for the luxury of storing something in their safe custody packets, then I’ll have to do that. Give or take some disclosure, but it’s a big no.
In terms of who should be involved in preparing your Will. Now, their legal answer is you are the only person who should be preparing your Will. Because as a practitioner, I have to make sure that no one is influencing your decision-making, that there is no one else who is forcing you to do certain things, and that I can assess your instructions individually without the influence of anyone else.
Now, immediately, that doesn’t work in terms of having mum and dad in front of me. They’ll have shared goals, they’ll have very similar assets. So, I can’t I won’t interview them alone because I would just double everything and it’s have to have the same conversation twice. We have already expanded who should be involved, but in terms of your support networks, your caring committees, your circles of influence, all of those people should be involved in making your Will. I’m thinking of who I’m going to appoint as executors, you know, is there something that you could do is there something that you don’t want to do, but also your accountant, your financial advisor, your extended family?
As many people as you are comfortable sharing these very personal and intimate decisions with, that’s who should be involved in making your Will, because they are the ones who will be left behind to give rise to your wishes and fixing any messes that we might not have accounted for in your Will.
Now, in terms of the extra stuff that we we’ve talked about in terms of vision statements, parenting plans, letters of wishes. The big thing with these documents is you don’t want them to inadvertently look like a Will. There’s a time and a place for when the vision statement, for example, should be attached to a trust deed, for example.
But you don’t want to restrict any of the decision-making process from the Wills perspective, because when you’re making it in 2024 and it’s not going to come into effect until 2050, 2060, the circumstances might be vastly different, and most people don’t update their Wills as much as they should. So, I’ll take this opportunity to say, just pick it up every 3 to 5 years.
Do I still like this person? Is that…? Yep I still live there. We still own that property. Yep, that still works. That’s all it needs to be. But it’s really not a set-and-forget document because your life changes, your views change. Your family member… they might have gained or lost capacity. They might have a new partner. Life changes and your documents should live and breathe with you.
Now you can write letters of wishes and as long as they don’t mention the word Will. They’re not dated, they’re not witnessed, and they don’t really contain anything that looks like you’re disposing of property…. go off to your heart’s content, write as many letters as you want.
But in terms of parenting plans or how to administer trusts, or what is important to you as the testator dealing with your property, you’ve got to be really careful in terms of what you’re actually writing down, because the more formal you make that document, the more you run the risk of inadvertently creating an informal Will that will revoke the nice, fancy Will that you’ve made, and then you’re back to square zero with a very expensive problem to fix that doesn’t reflect your wishes.
So, I’ll be the first to tell you that you don’t need a solicitor to make a Will. The huge asterisk there is we’re specialists in a very niche area of law for a reason, and I wouldn’t do my own plumbing. Please, at least get it reviewed by a solicitor if you’re conscious of costs or access the fantastic services at the PTG.
In the context of creating your Will, you might have some polarising decisions that your family might not agree with. And that’s where those early conversations are very useful in terms of managing people’s expectations.
But Australia doesn’t have full testamentary freedom in the way that you might see in American pop culture, where telling someone I’m going to cut you out of the Will actually means something.
Over here we have a much more inspired by the UK because of our history, but we have moral and legal obligations to people that we have these biological relationships to.
So, sometimes when we’re creating an Estate plan that’s very specifically addressing the needs of one person, a practitioner’s job is to assess the what’s called family provision risks or challenge risks to your Will from other people who would otherwise expect to receive something from your Will. So, sometimes there’s really not something that’s going to work for everything, and it’s going to be a pick two situation.
But in a lot of cases, our non-legal intervention of talking about your intentions with your family ahead of time will do a lot more than anything. I can write into a Will. But there is also certain family situations where that would be highly inappropriate to let the person that you are not trying to provide for, to let them know that, hey, I’m going to cut you out of that Will. The more open and transparent communication that you’re willing to have with your potential beneficiaries, the less likely you are to ever need me in a contested litigation context.
But in terms of what you can actually put into your Will, I thought I’d talk to you about some of the different types of trust that you can build into your Wills.
Now, this is very high level, but I will walk you through some main ones that we end up using through my practice. But in terms of trust 101, the whole point is separating the legal ownership of assets from the people who benefit them. Now, there’s lots of different ways and different reasons as to why you would do that.
The concept of trust originally came in for legal tax minimisation and protection of minors, where their parents had left an Estate. To this poor little lord who now no longer had families. And it would be pretty rough to… you’ve lost your parents but now here’s a huge tax bill. Thank you very much.
There’s a lot of policy considerations as to why trusts exists in the first place, but they’re not appropriate for everyone and they’re not a one-size-fits-all structure. They’re all very different and they have their different purposes.
Now, different depending on when you set up the trust, what trust you set up, what you’re doing with it. You’ll have different setup costs, you’ll have different compliance costs, you’ll have different ongoing reporting costs. And sometimes there’s a bit of a commercial assessment of is this actually an appropriate solution for your circumstances? So, you’ve got to take everything with a little bit of a grain of salt here.
But in terms of how a trust works in a nutshell is – I have yet to come up with a better way of explaining this – but trusts are like buckets.
There are three main roles, and there’s a few others, but the main ones that we will end up dealing with today is is the trustee – who is the person who is holding the bucket… They can move the bucket. They can shake the bucket, they can take the bucket away. But they’re the ones controlling the day-to-day affairs of the trust.
Now the trust itself is the bucket. And then you can put in a house, you can put in cash, you can put in chairs, you can put in anything tangible and intangible that you want into the trust as trust property.
And then usually the bucket will have little holes down the bottom in the shape of your chosen beneficiaries, that when you shake the bucket, money falls out through these little beneficiary shaped holes to your chosen people.
The separation between the trustee role and the beneficiary. This is where all the asset protection and quarantining of assets come from. That is the whole point of why we’re setting this up.
Now, in a simple Will context, everything goes from you to your Estate and straight to your beneficiaries. And that might be the best that you can do. And I’ll discuss it a little bit later, but that ends up going straight into your beneficiaries’ pockets. And they might not have the capacity or just the inclination to deal with any amount of money. And this is where trusts come in.
So, one of the simpler types of trusts that I see a lot, they are called protective trusts. I have set up protective trusts for horses. I have set them up for novelty cars. I have set them up for paintings. They don’t need to be about people, but they have to be for a singular purpose.
And they’re usually a person who controls an asset or for that person in particular. This is where you can control how the funds can come out and under what circumstances. It’s a really flexible type of trust because the whole concept is you’re removing the person who’s benefiting from those assets, away from the control of them.
In the case of the car, it was because there were some very fancy old Holdens, and the person who was going to receive them in the future is nine at the moment. And if something happened between now and when he was 30, his dad was like he would not understand what he is driving. He is not allowed to drive them until he appreciates what he has. So, it can be for any reason.
It doesn’t necessarily need to be for a specific purpose, other than I’ve just got cool stuff that I want to protect. But it can also be because you want to create a trust over a property so that someone has the right to live there for the rest of their life, or that they have the closest thing to home ownership, as you can provide them without any of the legal responsibility of owning that house. That is also a form of protective trust.
Then there comes fixed trusts, where the only real difference between a protective trust and a fixed trust is how the beneficiaries are qualified. Because in a protective trust, it’s usually for one person for these reasons and then there are other ways that they’re provided for.
In a fixed trust, it’s like here’s the capital, here’s what we’re going to do with the income that, that capital makes. Here’s the people that are going to be entitled to that capital. And that’s pretty much the extent of the how those fixed trusts mechanisms are sorted. They’re really for tax effectiveness and tax purposes. But there are other reasons of course. But that’s generally the main focus there.
The problem with these types of trusts in this context is where there are fixed beneficiaries, Centrelink wants to know about it, and that may or may not be something that’s appropriate or useful for your family. But they can be set up during your lifetime.
So, you can test the succession plan. You can play dead. In terms of the tax consequences of playing dead, you might not want to set up a whole trust just to try. You might just want to pretend in the context of a bank account, for example, the one that comes up the most often in my line of work is a discretionary testamentary trust.
Now I’ve got a little star next to the word testamentary. Just because any trust that is established pursuant to a Will is a testamentary trust. It’s because it is established pursuant to a testamentary disposition of property, at the risk of being pedantic. The main benefit of this type of structure is it has a defined range of beneficiaries, but there is a primary beneficiary, and then every secondary or tertiary beneficiary thereafter is somehow related to that primary beneficiary.
But where again, if we’re thinking about from you to your Estate to a trust with our beneficiaries, where there is a class or a range of eligible beneficiaries, any one of those beneficiaries can more readily take the position, like, it’s not my stuff, it’s the trust’s. I’m just the primary beneficiary. I’m just the insert whatever class of beneficiary you are. It’s not mine. I don’t have any control over it. I don’t have any decision-making process over what happens to the capital or income. It’s not my stuff. I just happen… money appears in my bank account and that’s pretty much the extent of it.
Now, the general rule of thumb in terms of how funds can come out in a discretionary testamentary trust context is for the care, maintenance and advancement of life of the primary beneficiary. So, it’s really whatever that person wants.
But in order for it to be quarantined for useful purposes for someone with a disability, the trustee has to be someone who is not an immediate family member or someone who has enough trustees that Centrelink can’t randomly take the position one day, that the beneficiary has the ability to influence the decision-making process of the trustee.
That’s then a really vague and complicated definition that sometimes really depends on which way the wind is blowing. But in terms of how the asset protection mechanisms work, because there is a really wide range of beneficiaries, capital and income of that trust is protected from creditors, is protected from means testing and income testing. It’s protected from bankruptcy, and it’s also protected from relationship breakdowns.
And so in a lot of cases, it’s applicable for a lot of different reasons, because one person might have specific needs, but one child, you might hate your daughter in law. So, there’s a range of reasons why this kind of structure is useful when you’re trying to protect what you’ve set up for your children.
Special disability trusts are a complicated vehicle at the best of times. Now, they’re purpose-built for people living with disabilities, but they’re very restrictive and they’re very complicated documents to set up. So, it is incredibly important that if you are going to set up trusts in your Will or a trust during your lifetime, and it is going to be a special disability trust that you have- this is where I will say you need specialist advice, you need accountant advice, you need legal advice, and you probably need a psychologist throughout that process.
Now the model trust deed hasn’t changed in ten years now, but it is very restrictive because of the benefits that it provides for a very particular part of our community.
Now, some of those restrictions are like they’re safeguarding measures to protect that person from themselves and from others, but they’re also restrictive in the sense that it disincentivise that primary beneficiary of maintaining or participating in gainful and meaningful work, because it is linked to your Centrelink hours that you can or can’t work.
It is also very restrictive in terms of how those funds can come out because whilst discretionary testamentary trust, the general reasons as to why it can come out is the care, maintenance and advancement of life. In a special disability trust context, it is only for the reasonable care, accommodation needs and trust maintenance costs, which in terms of providing a roof over someone’s head and making sure that their care needs are met, that’s great, but what about their quality of life and what that trust is actually going to be set up for in terms of safeguarding them to have a long and meaningful life.
You’ll have very little scope of how those funds can actually leave the trust. Now. There’s always an amount allowed per year in terms of discretionary spending, but as of this financial year, it’s only $14,000. In one financial year of funds that can come out of that trust for discretionary spending. So, that’s holidays, games, activities, anything that is vaguely fun, that doesn’t fit into reasonable care or accommodation needs.
So, it’s really restrictive. But the pro side of things is it can only ever be used for one person. Side note that they can only have one special disability trust for their benefit, but you can put at the moment up to 781,000 and some change worth of assets in that trust, and that will be exempt for income support payments, whatever that might be.
A lot of people will use this vehicle to safeguard a house into that trust. But with property doing what it’s doing, you’re very quickly you figure out that unless it’s a small house, you’ll go over that asset limit and then suddenly you’re not entitled to the same homeowner or non-homeowner thresholds in terms of how Centrelink decides how things work.
So, there are pros and cons to every type of trust. So, what is the best type of trust now there is no one-size-fits-all and it’s usually a combination of a lot of them.
But it’s usually a combination of what can the person manage on their own? What can what needs to be safeguarded in terms of things that they won’t be able to or shouldn’t need to worry about? What residual capacity they have to participate in the management of the trust themselves, and what assets we’ll actually have available to us in terms of making it a commercially viable option for the family?
These are some of generally some of the questions that I’ll start asking people when they’ll say, you know, our financial advisor told us to get trusts… where do we sign? Like, hold your horses. I love the enthusiasm, but let’s step back a little bit. Now, Jim was talking about earlier where you don’t know what you do want, but you will know what you don’t want. And that’s generally how I approach this discussion, where it might be completely unacceptable that your family member is at risk of homelessness. Okay. So, that’s that’s a tick in my mind. But we don’t have the funds to set up or to purchase property for them.
Okay. So, we’re back at square one. But what’s the purpose that we’re trying to achieve? Is it tax effectiveness? Is it safeguarding? Is it a combination of both? Is it because that person will never be able to make a Will of their own?
So, we’ve got to make sure that they never end up with property in their sole name, that they would need a Will for. What’s going to happen to that, to the trust, capital and income, when that person for whom it was established passes or no longer needs those assets anymore? And also, who else do you have legal obligations to that we need to provide for? Is a trust going to be appropriate? Should we make it so that there’s more than one beneficiary? Is that going to affect the other beneficiaries’ entitlements?
There’s a Venn diagram of things that can go wrong. And that’s where someone who knows what they’re talking about can help you figure out where the best combination of those bad outcomes can be.
I’m very conscious that there’s never really a perfect solution, because our laws are a little bit behind, and what will work in one legal context will not work for. So, what will work in trust law won’t work for the tax office. What will work for the tax office won’t work for Centrelink. What will work for Centrelink won’t work for the actual people on the ground. So, it’s where that pick two combination, that’s usually where we end up of here’s the best vague situation that will work no matter if I die today, if I die tomorrow or in 20 years, something in here will work and my executor will know what to do because I’ve set them up for success.
Because we talked earlier about if someone doesn’t have capacity, how can they make a Will. Now, there is legislative provisions that allow for people who have been assessed as not having capacity or for medical reasons or for legal reasons. They can’t instruct a lawyer to prepare a Will for them. There is the option of preparing what’s called a statutory Will application to the court. This is by no means your first point of call.
This is a formal, really complicated type of application to the court. It’s in two stages, and the first one is pretty much asking the court permission to make the application in the first place. And then from there, when they say, okay, you’ve convinced me that it might be appropriate, what are you suggesting?
But a statutory Will is, some people call it court ordered Wills or court authorised Wills for minors, and is essentially where someone doesn’t have testamentary capacity for whatever reason. But they need one for X range of reasons.
Now, it could be someone who had capacity, received a compensation payment, and then lost capacity, or someone who never received or had never had capacity, but they received inheritance. And when you’re comparing what’s going to happen to the property that that person has, when you’re comparing it against what will happen if this person dies without a Will, according to the rules of intestacy of your state or territory jurisdiction, that is an unacceptable outcome.
Or there are reasons that if they had capacity, they would have changed or made or made a different Will, or they would have revoked the Will, that they have. A lot of the court considerations that they will look at are really vague, because the whole point is that there are no two situations that are going to be the same, but are generally look at you need to convince the court that the person that you’re trying to make a statutory Will for is reasonably likely to be incapable of making a Will.
You need to come to the court with the draft Will of what you think that person would have made, as their Will if they had testamentary capacity. You need to convince the court that for whatever range of reasons that you’re applying for this order, it’s appropriate for them to make it.
And there’s a lot of case law around property inherited from grandparents. And the basis of the application is because there is a carer parent who has been involved, and there is an absent parent who has never really had any significant participation in that child’s life.
But when that child dies, the first point of call in most jurisdictions is if there is no partner, it will go to the parents and the carer parent who’s been involved that whole time says it’s pretty rough that I’ve been here, boots on the ground for the last 20 years, but you get half just because you were involved.
That’s a lot of this type of litigation, but it’s normally not a straightforward process. You also need to convince the court that despite the fact that you stand to benefit from this kind of application, that you are still an appropriate person to be making it. And again, you’re having to prove a negative. You also have to prove that adequate steps have been taken to allow representation for anyone who has an interest in the outcome of these proceedings, and that can be an independent lawyer for the testator without capacity, as much as the people who are being cut out of the Will, if this Will were being made.
So, very quickly… money, greed and spite get involved and this becomes very expensive and traumatic experience for everyone involved. There’s no legislative context for what appropriate is for these purposes and is by design because what will be appropriate for one family will not at all be for another. And it allows for that really qualitative evidence of what is actually going to be relevant to you and your family.
But I must stress that it is much easier to spend longer with a practitioner or supporting someone in making a Will in a normal context than it is to go through this process, because you end up having at least one day in court.
And if you’ve watched any of the news recently about how much a couple of days in court costs you, it can rack up a pretty penny.
Now, I thought I’d move on to enduring powers of attorney, and I’m conscious that there’s been a lot of discussion about this throughout the day, but just for the sake of people who might have been in other rooms… an Enduring Power of Attorney is a document that you can sign to delegate decision-making responsibility for yourself to someone else that is called a substitute decision maker, where you consider that this person will have the power to absolutely ruin your life and you are trusting them not to.
In a lot of cases, most people don’t have that high threshold for many people in their lives, and it’s quite often that you only have 1 or 2 people that you would put in that threshold. But then from there, we talk about, does this person have the advocacy skills to be your attorney? Do they have the financial literacy to be your attorney?
Are they a type A combative person who is going to yell at the nurses when they’re making silly statements about you? But also be nice to nurses! Appointing an executor as much as appointing an attorney is very much not an appointment of love is actually an almost a I kind of hate you, but I love you kind of appointment because these jobs suck.
They are time consuming. They are really burdensome, and I’m sure I’m preaching to the choir in terms of who’s in the room. But you’ve got a little job interview and you’re assessing candidates of who is in your life, who can you bring in, who is available to you, and making some best case scenario or worst case scenario decisions to protect yourself and the people that you have caring responsibilities over.
In terms of delegating your caring responsibilities, there’s lots of ways to do this in non-legal context, And I normally tell people that having having this document is step one, start having conversations, start going out there. But in terms of this crowd, I’ll skip that because you know what you’re talking about.
But in your Enduring Power of Attorney, if there is something that is important to you in terms of how someone should address or someone who should be involved in facilitating your care, you can put that in your in your Enduring Power of Attorney.
They’re not necessarily legally binding instructions, but it is a very public document that goes in front of all of your allied health professionals. If you go to the hospital and give them a copy, if you go to your doctor and give them a copy, and if something happens, I want my son involved, he might not be able to tell you to do anything, but I want him to know what’s happening to me or, you know, call these people my caring committees, these people, and I want them to be involved, to help my attorney make decisions and care for my special person.
Whoever that might be, you can put in as much indication of your views in that document as you want, knowing that usually the document that the institutions and the systems will ask for.
But from there, Helen was talking about health attorneys that a doctor can nominate someone without capacity to make a decision for a very specific purpose.
But an Enduring Power of Attorney doesn’t have the same threshold as a as a Will in terms of capacity to make that document. And it can just come down to explaining whether or not this person is going to have a benefit in having signed the document. Now, in terms of do you want a Power of Attorney?
Most people will have absolutely no capacity issues. Can’t tell me what an Enduring Power of Attorney is anyway. And that’s just that common myth of what’s out there. So, my job becomes explaining it to people. And then from there I can see that I’m being understood. Okay. From there, let’s ask the next question. And a lot of this conversation is just an appropriate manner to the person who’s in front of me.
I’ve had widows having to make financial decisions for the first time in their lives, and they don’t know whether they have a binding death benefit nomination in their super.
They’ve never had to think about that before.
The same concept of, you know, can you see a reason as to why you would want someone else to be able to make financial decisions for you, and that’s just about having an appropriate conversation with the person who’s in front of you.
I’ve explained the difference between attorneys and executors using Star Wars references. It really comes down to how is the person in front of me needing to be? How do I how can I accommodate my legal advice to the person who’s in front of me?
And that can be pictures. That can be drawings that can be almost exclusively talking over text or it can be using really… I’ve explained the division of property. I broke a bracelet once because I was running out of ideas, but it really just comes down to appropriate language and pitching it to your audience.
And I’ll briefly touch on one more thing which one client called it the wishy washy stuff, and I can’t unhear it. But this was a gentleman of a certain age who probably had never had a vulnerable conversation in his life.
So, he tried. But in terms of what is important to you, in terms of your Will, your wishes, your values, there is a really big push in the ACT and like nationally, of recording an advanced care plan. And in the ACT it’s called a statement of choices document.
And that is not who or not what is what, not the who of who’s going to be making decisions, but how decisions should be considered and what they should be taking into consideration when they make decisions.
And that can be anything from as long as I know who I am and what’s going on, I’m sweet or, you know, I don’t want Foxtel, but as long as I’ve got a garden or if I don’t recognise what’s happening to me, then I just want to be kept free from pain.
There is no right or wrong answer in these contexts, it is very much just about how your health professionals can facilitate your wishes. whatever is important to you in putting those documents in writing, that can be anything.
And what I’ll leave you with today is a plan that is not in writing, is just a wish that no one can act on. It needs to be in writing because people forget, people lie and people do awful things to each other all the time.
So, if it’s in writing, no one can argue with it. And that’s my true sense from the perspective of a lawyer.