Q I am 58 years old, married with adult children.  I have been advised that I should update my will, make an Enduring Power of Attorney and appoint an Enduring Guardian. What is the difference is between a Power of Attorney, an Enduring Power of Attorney and an Enduring Guardian?

A A Will is a legal document that provides instructions on how you want your assets (Estate) distributed when you die.  Assets held as joint tenants do not form part of you estate; joint assets revert to the co-owner unless they are held as “tenants in common” whereby your share forms part of your Estate.  Superannuation assets are dealt with via a Nominated Beneficiary or Reversionary Pensioner by the Superannuation Fund Trustee.  Assets held within Superannuation may form part of your Estate if your Estate is the Nominated Beneficiary.

You need to appoint an Executor to administer your Will, typically one or two family members or trusted advisers.  Before appointing an Executor, please ask them first to ensure they are capable and prepared to take on the responsibility.

Whilst you can prepare your own Will it is an important legal document so seek professional advice first. Be aware of the consequences of decisions you make in your Will.  The involvement of the Supreme Court to settle disputes is expensive and ultimately will cost your estate, your beneficiaries and or other claimants.

A Will must be signed by you and your signature must be witnessed by two individuals who are not beneficiaries.  An unsigned will is invalid unless determined otherwise by the courts..

Wills need updating from time to time and should reflect your current circumstances; you may wish to change the Executor or recognise that your children are now adults and may have families of their own to consider. Anyone over 18 should have a will.

A Power of Attorney (POA) is a legal document where you appoint one or more people to act as your Attorney.  An Attorney will have the right to manage your legal and financial affairs within the powers that you grant them for the time you determine.  A POA ceases when you die or you lose the capacity to make your own decisions.

An Enduring Power of Attorney provides the same powers as POA however it continues to be in force if you lose the mental capacity to make your own decisions.  It is too late to appoint an Attorney if you have already lost capacity.  If you are no longer able to manage your affairs, the Courts or Guardianship Tribunal may be required to appoint someone to manage them on your behalf. You should appoint an Attorney who not only has the skills to manage your finances, but should be someone who you trust to act in your best interests, typically a family member or close friend.

An Enduring Guardian is a person you appoint to make decisions on your behalf in relation to your health and lifestyle needs.  Unlike an Enduring Power of Attorney, an Enduring Guardian only comes into effect if you become incapable of making decisions for yourself.  An Enduring Guardian cannot make decisions about your finances or legal matters.  Whilst they can make decision in relation to your medical care, they cannot overrule your wishes at the time of treatment.  Your Enduring Guardian should be someone you trust who will act in your best interests and respects your wishes.

A Will, Power of Attorney, Enduring Power of Attorney and Enduring Guardianship provide important but different roles in managing your legal, financial and health needs.

Follow Andrew on Twitter @AndrewHeavenFP.  This article was originally published in The Australian.