Estate Planning

Estate Planning

Dying without a will

When a deceased has died without a will, including where the deceased has a validly created will that through some subsequent event, eg. remarriage, has become invalid, he/she is said to have died in testate. Rules of law will operate to dictate the precise manner in which the deceased's estate will be administered.

Where the deceased has left a valid but incomplete will, that is, it does not deal with the whole of the deceased's estate, the deceased is said to have died partially in testate. These same rules of law will operate to the extent that the will does not. Instead of a grant of Probate, the Supreme Court will, following successful application by a person, grant Letters of Administration. These have the same effect as a grant of Probate. The person most entitled to seek the Letters of Administration is usually the person who benefits the greatest according to the rules of law that operate. Where there exists a partial intestacy, Probate will still be granted to the executor identified in the will who will be entrusted with dealing with the in testate part of the estate, according to the rules of law.

Purpose of a Will

Broadly, a will is the last direction that a person can give, effective following their death, regarding the distribution of their assets and liabilities. The person whose will has been prepared is called the Testator (male) or Testatrix (female).

The various choices that a testator has in deciding how to distribute his estate are virtually unlimited. Provided the testator does not extend his wishes beyond a few simple rules, the testator's will, can fulfill whatever his wishes may be.

Source: Peter Bobbin

The Benefit of Testamentary Trusts

Testamentary Trusts facilitate flexibility in estate planning.  Fixed testamentary trusts or discretionary testamentary trusts are established in a will and take effect following death.

Discretionary testamentary trusts can be an effective tool to make distributions to beneficiaries in a manner that reflects their respective personal and financial situations. A well drafted trust document will provide the trustee with a discretion to allocate income taking into account those situations.

For example, income distributions could be made to minor beneficiaries, taking advantage of their ability to utilise the tax-free threshold (providing they do not receive other income).

The tax savings can become all the more significant where there are several minor beneficiaries of a discretionary testamentary trust.

In all cases with a testamentary trust the will should provide for the distribution of the assets at the termination of the trust.

Source: Tower Trust (previously Austrust Ltd)

Powers of attorney

"A formal instrument by which one person empowers another to represent him, or act in his stead, for certain purposes."

Osborne's Concise Law Dictionary.



As expressed above, a grant of power of attorney may be for a specified purpose, a limited power, for example, to carry out a particular transaction such as a sale or purchase of a house; or the grant may be of a general power which allows the person with the power of attorney to carry out any business, act, matter or thing or deal with any affairs or assets of the person that has granted such a power.

The person granting the power of attorney is called the donor, principal or grantor. The person receiving the power of attorney is called the donee, the attorney or grantee.

In New South Wales, the grant of power of attorney is regulated by the Conveyancing Act, 1919 (NSW).

Power of attorney may only be granted by someone who is over the age of 18 and who is of sound mind at the time of the grant and capable of fully understanding the nature and purpose of the document that they are signing.

The attorney must also be at least 18 years of age and of sound mind. Subject to the manner of grant of the power of attorney, the attorney may act individually or jointly with another. Unless specifically provided for in the grant, the attorney is not entitled to exercise his powers for his own benefit or advantage.

A conservative view would dictate that even where the benefit or advantage derives from a third party, eg. commission income following the placement of investments, without authority for the attorney to benefit from his actions, the benefit or advantage must be returned to the principal.


Source: Peter Bobbin

Enduring power of attorney

Where it is intended that the power of attorney is to continue operation even after the grantor has lost capacity through unsoundness of mind, the original grant of power of attorney must be witnessed in the relevant prescribed form. Usually this requires the witness(s) to endorse on the power of attorney a certificate stating that they had explained the effect of the power to the grantor before it was signed. The prescribed form differs for each state. In New South Wales it can be signed before a Clerk of Petty Sessions, Barrister or Solicitor. The power of attorney prepared in this manner is known as an enduring power of attorney.

Where it is intended that the power of attorney be used in the sale, purchase or other transfer of real estate, it is a usual requirement that the power of attorney be capable of registration.


Source: Peter Bobbin