Do I need a Will?
This is a question that I get asked on a regular basis. The short answer in most cases is yes, it is a good idea to have both a will and powers of attorneys or you risk your estate being dealt with in ways you may not have either foreseen or wish to have happen.
The other thing I recommend is to have them reviewed and / or updated if a major life event occurs such as you acquire or dispose of substantial property such as an investment home or the family home, or upon a marriage or divorce.
In some Australian jurisdictions divorce (not separation) can render parts of a will null and void, the effects of which I explore below. Similarly, a new marriage can render a will void.
Under the Victorian Wills Act 1997 there are some important, but limited exceptions to your Will being void upon marriage.
(i) The first is where your Will explicitly states that it was made “in contemplation of marriage”. In such cases, your marriage will not revoke your Will.
(ii) The second exception provides that marriage will not revoke any gifts or appointments made under your Will to the person you are married to, as long as you are still married to that person at the time of your death.
What if I don’t have a will?
A person who dies without a (valid) will is considered to have died ‘intestate’ and their estate can become subject to the rules in Part IA – Intestacy, of the Administration and Probate Act 1958 (Vic) or in the case of small estates ($100,000 or less) Part II- Small Estates, of the Administration and Probate Act 1958 (Vic).
Section 70 of Part IA, dictates how your estate is to be dealt with, and who may receive various gifts.
For example, under Section 70ZK of the Administration and Probate Act 1958 (Vic), in the situation where an intestate person has no partner or child, parent or sibling (or child of a sibling) but ‘leaves more than one aunt or uncle’ the ‘residuary estate must be divided equally between the aunts and uncles’.
Similarly, under Section 70ZJ, Grandparents are entitled to the ‘residuary estate’.
This division of your estate could very well be not in accordance with what you would have wished, and may result in persons who you would not have chosen to leave anything to, receiving part of your estate.
Powers of Attorney
It is also a good idea to have powers of attorney such that a trusted person can administer your affairs if you become infirm and unable to make financial decisions for yourself.
There are two main types of powers of attorney:
(i) A general non-enduring power of attorney authorises a person or persons to act on your behalf for specific purposes. You can determine the scope and terms of the power by specifying in the appointment what you are authorising your attorney(s) to do.
For example, you could grant a general non-enduring power of attorney to:
- sell your house for a specific figure
- operate your bank account
- give someone control of all your business affairs, or
- act on your behalf while you are overseas or in hospital.
(ii) An enduring power of attorney authorises the attorney to make financial and/or personal decisions on your behalf. A financial power includes anything related to your financial or property matters. Personal matters relate to personal matters, such as your lifestyle. An enduring power of attorney differs from a general power of attorney in that the authority to act on your behalf does not cease if you become physically or mentally incapable of managing your own affairs.
It is no longer possible to appoint someone as a medical agent under an enduring power of attorney (medical), however existing medical powers of attorney (made and executed prior to March 2018) are still valid. Instead, you can appoint a medical treatment decision maker. You can also appoint a medical treatment support person and make an advance care directive.
These should be discussed with your lawyer, as it is critical the correct person (such as a defacto partner or parent) be appointed. Of course in the case of a child or husband / wife the parent or spouse can make these decisions.