Estate planning isn’t solely reserved for those with valuable possessions and wealth – it’s also about who will take care of you if you’re unable to look after yourself. By putting your preferences into a legally binding document, you have control over your care, regardless of what happens. Estate planning can also include property tax adjustments which will benefit the people who inherit your assets.
According to research by Guardian Trust, around 1,500 New Zealanders die every year without a will – and one in four Kiwis don’t currently have a will. That figure is much higher for some populations – just 20 per cent of Pasifika people have a will, and only 25 per cent of Asian people and 31 per cent of Māori, often because there’s a feeling in these communities that wills are tempting fate.
With the rising rate of dementia, the financial tangles involved in serious accidents or illness, and the legal nightmare if you die without a will – taking care of your estate planning early isn’t about dwelling on the negative. It’s a simple way to make life easier for your family when things get tough. If memory loss or accident leaves you unable to care for yourself, you’ll have people who you trust to take over.
Estate plan breakdown
An estate plan is a group of three documents which can come into play at different times.
- A will: a legal document every adult should have – dying without one only leaves a mess for those left behind.
- Enduring powers of attorney (EPA): appointed loved ones who you trust to look after your property and medical care if you can’t.
- A living will: how you’d like to be cared for when you can’t speak for yourself.
Your will is only legally binding after you die, but your EPA and living will can be activated while you’re still alive under certain circumstances.
What does a will include?
Your will names heirs, bequests, guardians for any dependent children, and your executor. Heirs will usually be family members who will inherit the bulk of your estate. Bequests are gifts from your estate to charities, organisations or causes, and guardians can be anyone you trust to care for your children. The executor is the person responsible for carrying out the terms of your will, making sure bills and taxes are paid, and your beneficiaries receive their share of your estate. You can have more than one executor named in your will.
It’s important to consult the people you want as guardians and executors. They need to agree, and to be aware of what their responsibilities are. It’s also a good idea to check names listed as beneficiaries on your insurance policies and change them if they are deceased or divorced.
What about a living will?
If you’re unable to speak for yourself, a living will gives permission for someone trusted to make medical decisions on your behalf. Most commonly a living will includes your preferences around ongoing life support, or DNR (do not resuscitate) instructions. If you’re not sure what to include, have a chat with your doctor.
Enduring powers of attorney (EPA) – for peace of mind
If you get to the point where you can’t look after your property or yourself, those who have enduring powers of attorney step in and do the job for you. EPA grants someone the legal right to manage your care and your assets.
One EPA covers your medical care, and the other your property. You can choose one person to do both, or one for each. Once you’ve been identified by a specialist as incapable, the EPA are activated, and your attorneys can take charge.
Don’t wait – do it now
It’s good to get your estate planning sorted as soon as possible. Begin by listing your assets, valuables and heirlooms. Not all will have a monetary value: for example, treasured family history such as old letters, or a possession with value beyond money like your mother’s diamond engagement ring.
Once your list is complete, make another one listing your heirs, beneficiaries, and trusted EPAs. This will help you make a decision about where you would like your possessions to end up, and who you would like to be in charge of your affairs.
Include your family
Before you sign anything – consult with your family. Help the trusted people you’ve chosen understand what they’re in for, and give them a chance to ask any questions. If you want heirlooms to stay in the family, identify relatives who care about them, and who have room in their homes for any larger items. Plus, getting agreement on who gets your mother’s engagement ring will hopefully put a stop to an arguments after you’re gone.
Update your estate plan regularly
Just as the beneficiary of your life insurance may be an ex-spouse, heirs may unexpectedly pass away or new grandchildren are born – you might even win Lotto. That’s why a regular update of your estate documents is a good idea. Update your estate plan immediately after any big life changes.
Draw up those documents and keep them current
Your loved ones will thank you for taking care of your estate planning early. They’ll be free to look after you when you need it, and celebrate your life when you die – without any aggravations. Consult your lawyer, doctor and financial adviser if you have one, and get those important documents drawn up. Make your lists, talk to your family, and choose trusted people to look after you – before and after you die.
Once your estate plan is in place, review it regularly every couple of years and update it when necessary. Then it’s time to sit back and enjoy your life!