Who will act when you can’t? Estate Planning

By John Hollyman09 Mar 2017

Who will act when you can’t? 

Estate planning is an often-overlooked component of holistic financial planning.  In our years of experience, we have found that many people have not given this area as much attention as they should and it is not until we undertake our thorough discovery process and identify what is important that they even realise there are gaps in their current situation.  Many simply do not address this until a trigger event such as the birth of a child, getting married or a divorce.  We have found that by simply raising this as an area that should be addressed whether our assistance is required or not is an area that is highly valued.  We assure the people we work with that by attending to your estate plans it does not tempt fate!

We have encountered all too frequently that whilst many people say they will attend to this important area it is common that nothing happens and at our next meeting the status quo has remained.

The overall goal of estate planning can be simply stated as:

Having the proper legal documentation in place so as in the event of death or incapacity you’re your entire affairs can be managed by the appropriate people (person) minimising the stress and angst now of grieving. A concurrent objective is in preserving the value of your estate by addressing inefficiencies, potential claims and tax minimisation planning.

The value provided is the peace of mind in that you have had the foresight to give careful consideration to this aspect of your affairs and that in the event of death or incapacity you have not left a huge mess behind!

The Eqeus estate planning service offering is an integral component of the Eqeus comprehensive offer.  Our goal is that all our clients have properly considered estate plans.

Our values based approach to financial planning leads to a great understanding of what is important to our clients and these values are crucial in getting a proper estate plan in place.

In a recent interview with a client it was clear that the client wanted to scope estate planning advice out of any advice that may be given.  In the preliminary questionnaire, they had indicated that they had taken care of their estate plans.

Given our specialty in this area and passion for ensuring people understand the impact of loss of capacity as well as death on their affairs I am not happy to accept this as an answer without further discussion. They had a self-managed superannuation fund and a family trust which they had recently established and none of which had been considered in their planning. Proper estate planning considers the succession pathways for all entities i.e. how control of structures is passed to the right person so as these assets which are not governed by your will are also brought into your estate plan.

Estate planning is so much more than:

Do you have a will? Yes or No?

Do you have a power of attorney? Yes or No?

As it transpired the client whilst having appointed a legal representative (LPR) or executor in their will i.e. the person who steps into their shoes and administers the estate as per the instructions they had not appointed any representatives for managing their financial affairs or lifestyle choices in the event of a loss of capacity.

These roles in NSW are referred to as Enduring Powers of Attorney and Enduring Guardianship (enduring in that the power of the representative or agent endures in the event that the principal losses capacity).

There is nothing more certain than death, as paying tax is optional (100% deduction for charitable giving – really!) and given this, a will is vitally important though in my opinion of equal importance is having the above legal documents in place to deal with the loss of capacity and the impacts this can have.   Whilst loss of capacity can happen for numerous reasons dementia is one of the most common causes.  The statistics are frightening – refer to the website below.  Currently there are 1600 cases of dementia in Australia each week which is expected to grow to 7400 per week by 2050.

It is of the utmost importance that the person nominated is an appropriate person – they will in effect have the same power as the principal.  It is because of this that a lot of thought and discussion should be had prior to giving someone this power.  Thought should be given to restricting the power or making it conditional on certain events. Commonly spouses will appoint each other and potentially a backup in the event the primary is unable to act.

Consider the following.  Commonly with superannuation a member can put in force a binding death benefit nomination (BDBN) – this is binding on the trustee to pay the benefit to the nominated person (provided they are a SIS dependent).  Whilst these BDBN typically lapse after 3 years they can now be made non- lapsing.  Consider a BDBN that lapses in 3 years and within this period the member loses capacity – the member has an enduring power of attorney.  Can the power of attorney make a valid binding death benefit nomination?  What if the nomination is to the person who is the power of attorney?  How will this be viewed by other beneficiaries in the event of death?

Would it be better to give detailed instructions regarding this as part of the powers the attorney has as opposed to leaving open for interpretation?

As can be seen these matters are legal in nature and you must see a solicitor to discuss and prepare the legal documentation.

At Eqeus we have a number of solutions to help our clients address this important area and get high quality estate plans in place.


John Hollyman

John’s clients say it is his attention to their story, his ability to lead their journey to discovering wealth and his fundamental desire to get things done that sets him apart from others in his field, while his peers quote trustworthiness, clear strategic thinking and thoroughness that goes above and beyond expectations.

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