Estate planning considerations for older Australians

As we age, our priorities, financial situations, and health needs inevitably change. For older Australians, creating or updating a succession plan becomes a critical step in ensuring their wishes are respected, their loved ones are protected, and their assets are distributed according to their desires. Today, we’ll discuss several important considerations that older Australians should keep in mind when planning their estate and creating a will. 

1. Understanding the Role of Nursing Homes in Estate Planning 

One significant consideration for older Australians is the potential need for aged care, including nursing homes. There are both public and private options available. However, private nursing homes often require a substantial financial commitment known as a Refundable Accommodation Deposit (RAD). This is a lump sum payment to secure a room, and it is held by the nursing home, invested, and then returned in full (minus any agreed deductions) to your estate upon your passing. 

These deposits can range from $200,000 to $1 million, depending on the facility and level of care provided. For many Australians, the only way to afford these deposits is by selling their principal place of residence. This can be a difficult decision, especially for those who are emotionally attached to their homes or have planned to leave them to their children as part of their estate. 

If you or your partner need to enter a high-care nursing home, it's essential to understand how this impacts your estate plan. You may need to consider selling assets or liquidating certain investments to cover the RAD. This decision can affect the distribution of your estate, particularly if you have previously planned to give specific gifts to your children. It is wise to engage a financial planner to help navigate these decisions, particularly if one spouse requires high care while the other does not. 

2. Making Informed Health Decisions with an Enduring Power of Attorney 

Another crucial aspect of estate planning for older Australians is ensuring that health and financial decisions are managed appropriately if they lose capacity. This is where an Enduring Power of Attorney (EPOA) becomes vital. An EPOA allows you to appoint someone you trust to make decisions on your behalf should you become incapacitated. 

For older Australians, it is often beneficial to consider an immediate power of attorney rather than one that activates only upon incapacity. This is because adult children or other trusted individuals may already be assisting with decision-making, such as managing finances or healthcare appointments. By formalizing their authority through an EPOA, you ensure that your wishes are respected and reduce potential conflicts or legal complications. 

Additionally, if you have an early diagnosis of dementia or Alzheimer’s, setting up an EPOA while you still have the capacity allows you to choose who will make decisions for you. It is a conversation worth having with your lawyer to explore the best approach for your circumstances. 

3. Maximizing Superannuation Benefits for Your Heirs 

Superannuation is another area where older Australians must tread carefully in their estate planning. Many Australians do not realize that superannuation is taxed when it is left to non-dependent beneficiaries, such as adult children. The tax rate can vary depending on several factors, including the nature of the super fund and the recipient’s tax bracket. 

To maximize the benefits of your superannuation, it is essential to consult with a financial advisor. They can provide strategies to help reduce tax liabilities and ensure that more of your hard-earned superannuation goes to your loved ones rather than the tax office. 

While there are ways to manage this, such as withdrawing super and gifting it before death, these strategies come with their own set of rules and considerations. Professional advice is crucial to ensure you make the right decisions for your financial situation and estate plan. 

4. Protecting Your Estate in New Relationships 

For older Australians who are single, widowed, or considering entering a new relationship, it is crucial to understand the potential implications for their estate. Under the law, a de facto relationship is recognized after two years of living together on a genuine domestic basis. This designation can impact your estate significantly, particularly if you wish to protect your assets for your children from a previous relationship. 

If you wish to prevent a new partner from having a claim on your estate, it's essential to discuss strategies with your estate planning lawyer. These might include creating a binding financial agreement, setting up a trust, or other protective measures to ensure your estate goes where you want it to. 

5. Regularly Reviewing and Updating Your Will 

One of the most important steps in estate planning for older Australians is regularly reviewing and updating your will. Circumstances change—whether it's due to a new relationship, changes in health, or the need for aged care—and your will must reflect your current wishes. At Vicca Law, we send out a yearly reminder to clients to review their wills and consider any significant changes in their circumstances. This proactive approach ensures your estate plan remains up-to-date and effective. 

Plan Your Estate with Confidence 
 
If you are an older Australian and it has been years, or even decades, since you updated your will, now is the time to talk with a local solicitor ensure your estate plan reflects your current wishes. Don’t let outdated documents jeopardise your hard-earned legacy. Visit www.viccalaw.com.au to book a free consultation, or email me directly at lidia@viccalaw.com.au. Let’s work together to create a plan that gives you peace of mind, knowing your wishes will be respected and your loved ones will be taken care of. 

At Vicca Law, we are committed to helping older Australians navigate the complexities of estate planning. We understand that this can be a daunting task, but with the right advice and guidance, you can have confidence that your affairs are in order. Don't wait—take control of your future today.