Superstar Fatalities Highlight Need for Will

It may sound trite but the recent wave of unexpected superstar fatalities, including Michael Jackson’s untimely death, point to the need for a legal will. Regardless of age, marital status or size of the estate, drawing a will makes a lot of sense and can simplify the estate issues in the event of a surprise fatality.

The turmoil surrounding Michael Jackson’s $1 billion estate and the protracted litigation surrounding Australian rock star Michael Hutchence’s $20 million estate demonstrate the emotional stress, inflated costs and confusion that can arise from improperly filed and updated wills.

Creating and filing a will is all about stipulating your wishes clearly, concisely and in sound legal format. A proper will eliminates family squabbles, creditor complaints and assures that the wishes of the deceased party are identified. Basically, a sound will outlines a footprint for the legal system to administer in an orderly manner.

Scott Whitla, a partner with McCullough, Robertson Lawyers in Brisbane suggested that Jackson’s will, which was reportedly last visited in 2002, has created a legal nightmare. “His mother, Katherine has already challenged the will’s executors and creditors are waiting in the wings,” offers Whitla. Of course, with each legal battle the assets of the estate are further diminished and the chances of events unfolding the way Jackson has envisioned become less and less.

Unfortunately, legal confrontations over estates are not limited to superstars. Issues of inheritance, custody and administration can be resolved with a properly drawn and recorded will. Wills can be adjusted in later years so the individual can make adjustments as family situations change.

“Careful thought must be given to what you own and how you own it and your wishes and intentions must be balanced against the needs of your surviving family members,” said Whitla.

Dying without a will can raise serious issues, as family members tend to want to interpose their wishes as opposed to the legal process for estate distribution without a will. The individual drawing the will should always consider tax implications when making final decisions.

Despite legally establishing a footprint for distribution, the will is easy to amend as the need mounts. However, a person’s will should be reviewed periodically to assure accuracy.

Considering an Enduring Power of Attorney?

As we plan for retirement, we should consider creating an Enduring Power of Attorney. Unlike a general Power of Attorney, an Enduring Power of Attorney continues to have effect after the Principal loses the ability to make responsible financial, personal or health decisions.

Usually when the Principal begins estate planning, an Enduring (or Protected) Power of Attorney is assigned. This decision assures ongoing financial, personal and health decisions by an attorney who represents the Principal’s best interests and prevents oversight of these matters by a court appointed individual who might be unaware of the Principal’s wishes.

To arrange for an Enduring Power of Attorney, the Principal must invoke the authority and have a certificate attached to the Power of Attorney and signed by a prescribed person, usually the solicitor, who prepares the document.

The certificate states that the Principal understands that the Enduring Power of Attorney will be in effect if the Principal loses legal capacity. The absence of such a statutory certificate would mean that the Power of Attorney would cease to operate once the Principal loses legal capacity.

In many ways, creating an Enduring Power of Attorney is like insurance against the possibility that during your lifetime you may lose the capacity to manage your own affairs. An Enduring Power of Attorney protects the Principal’s interests and the interests of the Principal’s heirs.
Granting an Enduring Power of Attorney does not transfer the decision-making authority in personal or medical matters.

Understanding the ramifications of appointing an Enduring Power of Attorney
Appointing an Enduring Power of Attorney is an important decision. When considering the appointment of a Power of Attorney, the Principal should discuss all relevant issues with a legal advisor, including the following:

• The choice of the person or persons to be appointed by the Power of Attorney - one or more can be appointed, as well as reserve Attorneys.
• The conditions or limits that should be placed on the grant of Power of Attorney and in what circumstances the Attorney should be free to make decisions?
• The circumstances under which a Power of Attorney would become ineffective such as if the Principal’s appointee declines the responsibility.
• When and how a grant of Power of Attorney can be cancelled or revoked.
• Any risks in the granting of a Power of Attorney?
• How the Principal arranges for third parties to accept a Power of Attorney.
  

Legal Documents Online provides a complete online Enduring Power of Attorney kit for both singles and couples.

The Power of Attorney

When managing our financial, personal and health affairs, there are many reasons we might wish to empower a representative to act on our behalf. Assignment of a power of attorney (POA) occurs when a legal document is drafted and executed and appoints an entity (the attorney) to act on the behalf of an individual (the principal) in all activity involving the property or financial matters of that principal.

The length of time the Power of Attorney is in effect is determined by the principal. The Principal can elect to authorise an attorney for either a very short, precise amount of time or for an extended period. Many people who travel extensively or who are undergoing extended medical care utilise a Power of Attorney.

Assignment of a Power of Attorney authorises an entity or individual to represent the principal in property and financial activities only. The Power of Attorney is not authorized to represent the Principal in personal or medical matters.

The general Power of Attorney is revoked when the Principal loses the ability to make financial decisions. Principals often authorise family members, friends or colleagues to serve with a general Power of Attorney.

LegalWill.com.au allows you to prepare both General & Enduring Power of Attorney authorisations online for any Principal over the age of eighteen.

What is an Enduring Power of Attorney?

An Enduring Power of Attorney is a more comprehensive assignment with more diverse authority than a General Power of Attorney. Unlike a general power of attorney, the authority of an Enduring Power of Attorney continues in the event the principal loses the ability to make decisions for themselves. An Enduring Power of Attorney allows the representative to assign the authority to make financial, personal and health decisions to a representative of their choosing. An Enduring Power of Attorney provides ongoing management responsibilities when an unexpected disabling event occurs.

With an Enduring Power of Attorney, the principal can plan the actions the representative will perform on their behalf. The principal can nominate one or more attorneys and determine precisely when that authority to act commences. The principal can give the attorney or attorneys the authority to make any decision that the individual would normally make. The principal also has the ability to limit the actions of the Enduring Power of Attorney.
For example, a financial attorney is responsible for all financial matters including receiving income, paying bills, taxation and contractual matters, investment and financial planning, legal actions or property management. Actions of a financial attorney are specifically confined to financial matters.

Meanwhile, a personal or health care attorney can make important decisions like where the principal should live and how daily activities like diet and dress should be managed. The health care attorney would have the authority to make all decisions regarding the administration of health services or procedures.

When should an Enduring Power of Attorney be assigned?
An Enduring Power of Attorney should be assigned when a principal is over the age of eighteen and has the capacity to understand the nature and effect of the power you are bestowing upon your attorney.

What would happen without an attorney?
Depending on the principal’s circumstances, the problems created by a disability could be far-reaching and pose financial, personal and health concerns. Some financial matters may be handled on an informal basis but even these minor decisions can lack clarity and definition.
In the absence of an Enduring Power or Attorney, disagreements between family members can arise and necessitate an application to be made to the Guardianship and Administration Tribunal for the appointment of an administrator. By assigning an Enduring Power of Attorney, the principal can choose who will administer their financial, personal and health interests.

What are the attorney's responsibilities?
The duties of any appointed attorney that include:

• acting with honesty and care.
• recognising your right to confidentiality and dignity.
• taking into account your existing relationships, values and culture.
• respecting your views and wishes.
  

For financial attorneys:

• maintaining records of dealings and transactions.
• maintaining the principal’s property separate from the attorney’s unless it is jointly owned.
• Avoiding conflict transactions. A conflict transaction is where there is a conflict between the principal’s interests and the interests of the attorney.
  

For personal/health attorneys:

• considering the advice of your doctor or health care provider.
• ensuring that any decision contributes to promoting health and wellbeing.
• choosing the least intrusive treatment when there is a choice.
  

What to do if an attorney is not acting properly?
Anyone who suspects that the Power of Attorney is not being exercised properly can inform the Adult Guardian. The Adult Guardian has the power to protect the principal’s interests if the principal is disabled. The Attorney may be required to provide accounts and details regarding decisions that have been made. An Attorney who does not adequately protect the principal’s interests can be replaced.

What is a General Power of Attorney?

A general power of attorney is a legal document that allows a principal to nominate one or more attorneys to act on their behalf. The acting attorney's authority ceases when the principal loses the ability to manage his or hers own affairs.

Typically, a general power of attorney is used in commercial transactions to give the appointed representative specific authority in financial matters. Under a general power of attorney, the appointed representative cannot make personal or health decisions for the principal. Legal Documents Online can prepare a general power of attorney for any principal desiring to authorise a general power of attorney.

Life Goes On With an Enduring Power Of Attorney

We live longer. Because we do, our responsibilities live longer, right alongside us. Even if we are able to manage our responsibilities, there comes a time when it makes sense for someone else to step in and help.

When we are no longer able to administer to our important responsibilities, an enduring Power of Attorney gives us the assurance that we will not disappoint ourselves or those around us. Selecting an Enduring Power of Attorney assures us that our financial, health and personal matters will be administered by a person of our choosing.

While it is easy to overlook appointing an Enduring Power of Attorney, this decision establishes a responsible transition if the unexpected should occur. Of course, the key to the effectiveness of the Enduring Power of Attorney is our selection of the individual who will best represent our interests in a manner of our liking.

In today’s busy world, filled with travel and mobility, principals are selecting an Enduring Power of Attorney at early ages. Despite our best intentions, surprises happen and when they do we are better served by having an ongoing plan in place.

What we do not want is a court-appointed overseer or family squabbles. These unfortunate possibilities are easily eliminated with the selection of an Enduring Power of Attorney. If something unexpected did occur and we were unable to make important health, financial or personal decisions, the Enduring Power of Attorney will act in our best interests.

We have worked hard to get where we are. We must protect our achievements and protect ourselves. By selecting an Enduring Power of Attorney, we know that our affairs will be managed as we would wish.

What is a Testamentary Trust?

Literally, a testamentary trust is a trust in a will. A testamentary trust is also referred to as a will trust and is a trust that arises upon the death of the testator, who is specified in the will. A will may contain more than one testamentary trust and may address all or any portion of the testator’s estate.
Testamentary trusts are distinguished from inter vivos trusts, the revocable trusts created during the testator's lifetime.
There are four parties involved in a testamentary trust:

• The testator or donor who specifies that the trust be created, usually as a part of the will that can be set up in abeyance during the testator's lifetime. The testator may be called the grantor or trustor, but is usually referred to as the settlor.
• The trustee is responsible to carry out the terms of the will. The trustee may be named in the will, or may be appointed by the probate court, which oversees the administration of the will.
• The beneficiary or beneficiaries are those persons who will receive the benefits of the trust.
• Although not a party to the trust itself, the probate court is a necessary component of the trust's activity. The probate court oversees the trustee's handling of the trust.
  

A testamentary trust is a legal entity created as specified in a person's will. The testamentary trust is occasioned by the death of the testator. The testamentary trust is created to address any estate accumulated during the testator's lifetime or created as a result of the settlor’s death, such as in a wrongful-death or from the proceeds of a life insurance policy. A testamentary trust can be created to oversee these assets.

A trustee is appointed to direct the trust until a set time when the trust expires. Examples of this expiration can occur when minor beneficiaries reach specified ages or accomplish a deed such as completing an educational goal or achieving a specified matrimonial status.

In a testamentary trust, the settlor is deceased and will not have any influence over the trustee's exercise of discretion. In some jurisdictions, it is common for the testator to leave a letter of wishes for the trustee to consider.

In practical terms, testamentary trusts tend to be driven more by the needs of the beneficiaries, particularly infant beneficiaries, than by tax considerations, which are the usual considerations in inter vivos trusts.

If a testamentary trust fails, the property will usually be held in resulting trusts for the testator's residuary estate. Many famous English trust law cases involved the residuary legatees under a will seeking to have testamentary trusts declared void so as to inherit the trust property. The most famous, or infamous, of these cases is Re Diplock [1941] Ch 253, which resulted in the suicide of one of the trustees who was personally liable to account for trust funds that had been disbursed to trusts the trustee thought were valid charitable trusts.

Advantages of a Testamentary Trust

• A testamentary trust provides a means for assets assigned to minor children to be protected until the children are capable of managing the assets.
• A testamentary trust has low upfront costs, usually only the cost of preparing the will to address the trust, and the fees involved in dealing with the judicial system during probate.
  

Disadvantages of a Testamentary Trust

• The trustee is required to meet with the probate court regularly (at least annually in many jurisdictions) and prove that the trust is being handled in a responsible manner and in strict accordance with provisions of the will, which created the trust. The administration of the trust may involve considerable legal fees, especially if the trust endures for several years or involves a sophisticated financial or investment structure, and always involves the fees imposed by the judicial system. These fees and expenses are deducted from the principal of the estate.
• The trustee must be prepared to oversee the trust for its duration, which can involve a considerable length of time. The trustee may also encounter possible emotional attachment and legal liability.
• A candidate to serve as a trustee may be named in the will but that person has no legal obligation to accept the appointment. If no trustee is named in the will or if no trustee is available, the probate court will appoint a trustee.
• It can be difficult for beneficiaries to bring a dishonest trustee to account. Thew beneficiaries can sue or may rely on the probate court’s review to unveil the malfeasance, but such remedies are slow, time-consuming, expensive and are not guaranteed to succeed.
  

Due to the potential problems, lawyers often advise that a revocable living will or inter vivos trust be created instead of a testamentary trust. However, a testamentary trust may be a better solution if the expected estate is small as compared to potential life-insurance settlement amounts.