It’s not unusual to worry about your future, especially when you’re older and living alone, but getting organised and making the right plans can help to ease your mind, says Susan Bonnici.*
There are all sorts of reasons why people live on their own. Some people make the choice to live alone, enjoying their own company or catching up with family or friends when it suits them. Some people find themselves single by circumstance.
Others are alone due to a difficult event in their lives such as a spouse passing away or as a result of a divorce or separation. For some, perhaps their loved ones live overseas, or they may be estranged from close family.
According to 2016 Australian Bureau of Statistics (ABS) Household and Family projections, the number of lone-person households is projected to increase from between 32% (0.7 million) and 53% (1.2 million) from 2016 to 2041. So the number of people living alone is only set to grow.
When you’re living alone it’s understandable to worry about how some aspects of your future will be managed. You don’t necessarily have the support network of a partner or close family members who are generally expected to assist with future planning. This can create questions – sometimes worrying ones – about who will take care of you or help you to make key decisions as you start to age, or if you lose independence or decision-making capacity. It may also make the eventual distribution of your assets once you pass away less obvious.
If you’re in this situation, where do you start in terms of estate planning?
One of the first steps you need to consider is appointing representatives that you trust to act on your behalf should you lose the capacity to make decisions for yourself. The legislation and the names of these documents differ in each Australian state and territory, but generally speaking, they cover financial and legal decisions, medical treatment decisions, and personal or lifestyle decisions.
The enduring power of attorney for financial matters allows you to appoint an individual or a trustee company to make financial and legal decisions for you if you are unable to act for yourself. This may include paying your bills, dealing with your investments and property, and completing your tax returns. It’s very important that your financial attorneys are trustworthy and have a good understanding of your personal financial situation.
You don’t necessarily need to wait until you lose capacity before activating your financial power of attorney. Some people decide they simply don’t want to bother with managing their investments and paying their bills and they want their financial attorney to start acting earlier. This can be a great way to ease the stress of keeping on top of your finances by outsourcing the responsibility to your financial attorney.
The enduring power of attorney for personal matters (sometimes called guardianship) cannot be a trustee company or organisation, it must be an individual. The person appointed in these documents can make lifestyle decisions on your behalf, such as where you live and who looks after you. It’s important that your personal attorney or guardian has a good understanding of your values when it comes to accommodation options in particular.
The enduring power of attorney for medical treatment (also known as the Appointment of Medical Treatment Decision Maker in Victoria) is responsible for making medical treatment decisions for you if you’re not able to make these decisions for yourself. You may wish to also document your medical treatment wishes in an Advance Care Directive, which you can complete with your GP. This will guide your attorneys if they are ever called upon to act on your behalf.
Anyone, single or partnered, can appoint close friends or family members to these roles. Alternatively, professional advisers or trustee companies may take on the role of financial attorney. The essential consideration is that it’s someone you trust to act as you would have wanted.
You also need to ensure that you have a valid will in place to cover the distribution of your assets after your death. Even if you don’t have any family members that you would like to benefit from your estate, you should still put a will in place so your assets don’t inadvertently end up in the wrong hands.
Your will needs an Executor which may be a friend or family member, or if you don’t have anyone that you would trust for this role, then you might wish to consider a professional executor such as a trustee company or a lawyer. The Executor is ultimately responsible for distributing your assets in accordance with the terms of the will. As with your attorneys, your Executor should be someone you trust completely to act professionally and in the best interests of your estate. It should be someone who has the time and capabilities to do the job properly.
In a land as diverse as Australia, it is not unusual for people who have made a life here to have more family overseas in their country of origin rather than on Australian soil. Even if you are close to overseas family, if you are living alone here in Australia, the distance can mean appointing family members who live overseas as executor brings with it a very practical challenge. Estate administration is still largely ‘paper-based’ meaning that a number of original legal documents need to be signed by the Executor. Posting these overseas may create delays and the risk of lost documents. There may also be tax implications involved in having a foreign Executor that can be costly for the estate.
While it may seem less obvious to those in more traditional (or large and relatively functional) family structures with children and grandchildren, those who do not have offspring will often turn their minds to thinking about where and how they would prefer their assets to be distributed. A consideration may be to leave friends or relatives a gift of cash or a particular possession. Alternatively, are there any organisations that you wish to support who could benefit from a distribution from your estate. For example, I’ve had clients who have left their book collections to a school library, or valuable cars to a nominated organisation they belonged to.
Often people who don’t have family they are close to will choose to leave some or all of their estate to charity. A good way to do that is to set up a perpetual charitable trust as part of your will. The money will go into the trust, be invested and the income paid to your chosen charity every year, forever. In time the charity ends up receiving much more than it would if it had received a direct distribution.
There is also the option of setting up a charitable trust while you are still alive so you can see your philanthropy in action which can be very rewarding.
Single or not, many people have pets these days. If you don’t have close friends or family you are confident would be willing to look after your pet if you become incapacitated or die, then it’s worth investigating whether the RSPCA or an animal shelter will look after your beloved companion. Depending on the breed there are some organisations who will agree to take on the care of your pet but remember there will still be ongoing costs so you may need to make financial provisions for that.
Whoever you’ve appointed as your attorneys or executors, it’s a good idea to provide them with an updated list of your assets, liabilities, and wishes or intentions on a regular basis so that they have all the information they need to act for you if and when they are called upon to do so. Your attorney or executor will also be responsible for cleaning up your property and dealing with the distribution or disposal of your possessions, so if you have any particular wishes about how this is done make sure that these are clearly documented.
Living on your own will often make you more conscious of what might happen to your place, your possessions, or your money when you’re gone. The right plans with the right people or organisations, is something you can take care of – exactly as you prefer it.
* Susan Bonnici is Senior Estate Planning Solicitor at Equity Trustees.