With an increasing incidence of mental illness affecting a significant proportion of our ageing population, an enduring Power of Attorney is an important legal document that enables trusted friend(s) and/or family member(s) to assume the role of substitute decision maker for financial and legal matters when a person becomes incapable. By taking steps to put in place an enduring Power of Attorney today, you have the power to nominate who you want to make decisions for you if you lose capacity. Failing to make an enduring Power of Attorney means there is no guarantee that the people you want making decisions for you will be the same people appointed as your financial manager.
Sometimes the role of a substitute decision maker involves making some big decisions which can in turn effect the distribution of a deceased person’s estate when the willmaker dies. For example selling the family home to help pay for entry into a nursing home. With this in mind, a willmaker should ensure that their Will takes into account their wishes before incapacity strikes.
Ademption occurs when property that has been gifted in a Will ceases to form part of the willmaker’s estate when they die. This can lead to unfair or unexpected outcomes because the willmaker’s wishes go unfulfilled and can leave a beneficiary disappointed.
In NSW there is legislation that provides an exemption to the failure of a gift of property that has to be sold by an attorney acting as a substitute decision maker for a willmaker. This exemption applies to Powers of Attorney signed after 16 February 2004. However a better approach that creates less angst for an attorney or an executor and more certainty is for a willmaker to ensure their Will properly takes into account their wishes. The best way of ensuring this is for the willmaker to regularly review their Will and update it when their circumstances change.
A properly drafted Will can make provision for contingencies such as the gift of specific property to a beneficiary but if that property has been sold then the proceeds of sale. Alternatively if the sale of that property seems likely, a willmaker may prefer to make a gift of a share of their residuary estate to a beneficiary rather than making a specific gift of property to avoid the gift failing if it is not owned by the willmaker at the date of their death.
At Everingham Solomons, we have the experience and expertise to assist you with all your Estate planning needs because Helping You is Our Business.
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