Will, power of attorney and enduring guardian

Three documents, three different jobs

• Will. Operates only after death. Deals with property.
• Enduring power of attorney. Operates while you are alive. Deals with property and finances. Made under the Powers of Attorney Act 2003 (NSW), it endures after you lose capacity, which is precisely when it is needed, and it must be witnessed by a prescribed witness who certifies that the effect was explained.
• Appointment of enduring guardian. Operates while you are alive. Deals with health, medical treatment, accommodation and services. Made under the Guardianship Act 1987 (NSW).

Why the will alone is not enough

Most estate planning problems arrive before death. After a stroke or a dementia diagnosis, nobody can sell the house to fund care, operate the accounts, or make a treatment decision. Without an enduring power of attorney and an enduring guardian in place, the family must apply to the NSW Civil and Administrative Tribunal for a financial management order and a guardianship order. That takes months, costs more than the documents would have, and the Tribunal, not the family, chooses who is appointed.

What a will does not control

• Superannuation. Not an estate asset unless it is paid to the estate. It is dealt with by binding death benefit nomination to the fund.
• Jointly owned property. Passes by survivorship, outside the will. Property held as tenants in common does not.
• Life insurance with a nominated beneficiary.

Executors

Appoint a substitute. Appointing your only executor with no alternative is the most common defect we see in home-made wills, followed by unwitnessed alterations, which are ineffective.