When it comes to Estate Planning, it is important for you to consider not only what will occur on your death, but also what would happen to your affairs should you lose the capacity to make decisions. Many clients primarily think of their Will when considering Estate Planning; however, a Will is only one part of a comprehensive and holistic plan for the future and does not address issues which may occur in your lifetime and which should be considered as part of your Succession Plan.

In this series of blog posts, we will take you through a number of important advance planning documents that can protect your future affairs in the event that you lose decision-making capacity.

Enduring Powers of Attorney (Personal and Financial)

We recommend that each of our adult clients should have a “standard” Enduring Power of Attorney (EPOA) for personal and financial matters as a minimum. You can appoint only one or multiple attorneys to act on your behalf. They can also be empowered to act alone or in concert. In the case of multiple appointees you can provide that there must be a minimum number to act in concert; e.g. 2 out of 3 children.

You can also stipulate whether your attorney(s) are empowered to make decisions on financial matters, personal matters or both. Generally, we recommend the inclusion of a clause in the EPOA document specifying that the Power does not take effect until you have lost decision-making capacity and a medical professional has so certified.

Examples of ‘financial matters’ include:

  • Paying expenses for the donee of the power (referred to as the “principal”) for their maintenance, upkeep and support (such as mortgage payments or rent and household bills
  • Paying any debts of the principal
  • Making investments for the principal
  • Carrying on any trade or business of the principal (unless if that activity is carried on by a company where in which case other arrangements will need to be put in place)
  • Insuring, renovating or selling the principal’s property

Examples of ‘personal matters’ include:

  • Where and with whom the principal lives which includes whether they need to be placed into care
  • Daily living issues such as diet and dress

EPOAs and Superannuation

A common feature of an Estate Plan is a Binding Death Benefit Nomination (BDBN) whereby the principal nominates who is to receive their superannuation death benefits. We recommend that a BDBN should be non-lapsing and that your EPOA includes a provision explicitly authorising or prohibiting the attorney to deal with your superannuation, including the power to create a new BDBN.

The situation is somewhat more complicated if you have a self-managed superannuation fund (SMSF). Whilst you may want your attorney to be able to act as a director of your SMSF in your stead should you lose capacity, it is important to confirm that the SMSF’s trust deed does not prohibit this. If the trustee for the SMSF is a company or body corporate, the company’s constitution will also need to permit the attorney to take over as a director. If the constitution does so permit an attorney to take over as director, this may require the making of a Corporate Power of Attorney for such purpose (which we will address in another part of this series).

Appointment of Medical Treatment Decision Maker

Recent legislation has created the new role of Medical Treatment Decision Maker (MTDM) in Victoria whereby a MTDM can make decisions about your medical care if you should lose decision-making capacity, either permanently or temporarily. Again it is possible to appoint only one MTDM at a time, or several alternate MTDMs in case the first choice is unable to act, or to continue to act. When appointing a MTDM, you may include any limitations or conditions, such as medical treatments that you may wish to refuse for religious or other reasons.

When a MTDM makes decisions on your behalf, they must make the decision that they believe you would make if you still had capacity. Accordingly, the MTDM must consider any preferences that you have expressed and your values. For this reason, it is wise to appoint someone close to you to act as your MTDM, as they can also choose to refuse medical treatment if they believe that this is consistent with your preferences and values.

Making those preferences and values known to your MTDM is therefore incredibly important. In our next post, we will cover a binding method of providing instructions as to your medical care, known as an Advance Care Directive.

Can’t wait for Part Two? Contact Tony today to discuss planning for your future.