Wills and Enduring Power of Attorneys are often misunderstood, with people not knowing the true meaning behind each. This blog post will put the rumours to bed, and explain what they are for, and who should get them.
Myth 1: “I don’t need a Will, as I don’t own much”
This is simply not true. If you have money in the bank, the bank will often require a Will and probate to release these funds to your family. Also, even though you may not have much now, if you have life insurance or Kiwisaver, your estate could be worth more than you think. Small estates can get even smaller through legal fees due to claims from an ex-wife, a current spouse or other family members. You could still have claims if you have a Will, but at least you would have trustees and executors appointed to protect and preserve your assets in the meantime.
Myth 2: “I already have a Will”
This is another common myth and while that will amount to something, you also need to take into consideration, the date it was completed. This is important because a legal change in status will automatically revoke Wills. If you entered into a new relationship, or got a divorce/separated from a de facto, then your Will would be invalid. Also, while a Will is still technically valid even if it was drafted before you had children, it is advised that it be updated to state who their guardians would be if anything were to happen to you.
Myth 3: “My spouse will just get everything and manage it all”
This is also another myth that we hear a lot. You need to keep in mind a few things when using this logic: What if you were to pass away at the same time, who would manage your assets then? Who would look after your children if you were both gone? If you have a blended family, this could lead to disputes and tensions – even perfect families can have multiple claims. Our advice is that you pre-plan and have a Will drafted, to avoid any unnecessary extra anguish for your loved ones once you’re gone.
Firstly, to clarify, an Enduring Power of Attorneys come into effect if you become mentally incapable, and it stops when you die, whereas a Will comes into effect after you die. So there is no overlap between the two. There are two types of Enduring Power of Attorneys – Personal, mostly for your health, and Property for your assets.
Myth 1: Enduring Power of Attorney is for old people
A common perception is that Enduring Power of Attorneys are for the elderly. It is thought of as something you get before or once you have retired, but now in these current times and thanks to Covid-19, everyone should prepare for the worst. If you had an unexpected accident or illness, it could leave you vulnerable and unable to make important life decisions. If you got Dementia, Alzheimer’s, Parkinson’s or other brain affecting illnesses or symptoms, an Enduring Power of Attorney would be required. Most rest homes and care facilities now require an Enduring Power of Attorney by a matter of course and if you start displaying signs of these illnesses, it may be too late to sign one. People who operate businesses and make decisions and sign documents on a daily basis should especially consider having an Enduring Power of Attorney prepared in case they are taken out by some unexpected illness while their business must go on as usual.
Myth 2: Enduring Power of Attorney is like a Power of Attorney
Enduring Power of Attorneys is not the same as a Power of Attorney. A Power of Attorney only has effect when you have mental capacity, but you are unable to sign for convenience. Ironically, the requirements for Power of Attorneys are being phased out nowadays as the last two years of lockdowns have taught us that anyone can sign documents electronically if you have a computer, meaning someone could sign saying that they are you, when really, they have just gained access electronically. This is another issue and story for another day.
Myth 3: Enduring Power of Attorney comes into effect once I die
Enduring Power of Attorneys stop when you die. A common myth is that they come into effect after you die, but they actually come into effect when you do not have the mental capacity but while you are still alive. It can however be cancelled at any time if you tell your lawyer or your attorney while you have mental capacity.
Wills and Enduring Power of Attorneys are something we urge you to think about, even if you do want to avoid the topic of death. Unfortunately, death is a certainty, we just don’t know when. Being prepared means not leaving your loved ones in the lurch having to deal with your unorderly affairs as well as going through the natural grief. Please make it easier on them and prepare a Will and Enduring Power of Attorney so your loved ones and assets are protected.
We have taken care to ensure that the information given is accurate, however it is intended for general guidance only and it should not be relied upon in individual cases. Professional advice should always be sought before any decision or action is taken.