The difference between wills and enduring powers of attorney

Wills and enduring powers of attorney are often discussed and prepared at the same time with your lawyer as a prudent part of a person’s estate planning.  However, the documents have distinct purposes, and the roles of executors and attorneys are often confused.  Understanding how these different documents operate is essential for ensuring that your affairs are managed well, and your wishes are honoured, in life and in death.  

Your enduring powers of attorney are valid only while you are alive and, in many situations, only if you lose mental capacity.  Your will, on the other hand, while valid upon signing, the provisions are carried out upon your death. 

Will

A will is tailored to each individuals’ unique circumstances but must include who you would like to administer your estate and who you would like to receive your assets once you die.  It can also include your wishes around the appointment of guardians for minor children and burial and/or cremation.  While you are alive and have mental capacity, a will can be updated or amended as many times as you like.

Your executors are persons you appoint under your will to administer your estate once you die in accordance with your will and other legal provisions.  Some duties of your executor/s include:

• applying for probate if you die with over $15,000 worth of assets;
• uplifting your assets and pay off any/all debts; and
• distributing your remaining assets to the beneficiaries as stated in your will. 

The executor/s play/s a crucial role in ensuring that your wishes as outlined in your will are carried out, while also managing the estate's affairs responsibly and in accordance with legal duties. An executor/s authority to act for you only comes into effect upon your death.

Enduring Powers of Attorney 

There are two types of enduring powers of attorney (EPAs): one for personal care and welfare, and one for property. EPAs are a flexible document that allows a trusted person or persons (your attorney/s) to act on your behalf and make decisions for you concerning your property and care and welfare during your lifetime. 

A key distinction between the two EPAs is that an attorney’s authority to act for you in relation to your personal care and welfare only comes into effect if you are certified by a medical professional as no longer having the requisite mental capacity to be able to make those decisions yourself. This is to ensure that your right to make your own decisions relating to your health and life are protected and only limited to the extent truly needed, i.e. once you no longer have the ability to make decisions in your own best interests.  With a property EPA, you can elect for it to come into effect immediately upon signing or on mental incapacity, and you should speak to a lawyer about which option would be most appropriate for your circumstances.

You have the ability to define any restrictions of the authority granted in the EPAs, including specifying whether you would like your attorney to consult with any other persons about decisions they are making on your behalf.

If you do not have EPAs in place and lose the mental capacity to make your own decisions, then as an adult, no one has the automatic right to make decisions on your behalf in relation to your property and personal care and welfare.  If this situation arises, your family will be required to apply to the Family Court to have a welfare guardian appointed and property manager appointed so that someone can make decisions for you.  This process is costly and can be lengthy.  If you do not have a will when you die, the law sets out who is entitled to administer your estate and benefit from your estate meaning you do not control who you would like to administer your estate or benefit from your estate.

Once you die, your EPAs become void and your attorney/s no longer have the power to act on your behalf.  The power to make decisions in relation to your estate passes to your executors to administer your estate in accordance with the directions/wishes set out in your will.

Our Asset Planning team is available and dedicated to offering expert advice and guidance regarding inquiries related to your will and enduring powers of attorney.  If you have any questions about such matters, please feel free to get in touch.