Estate planning for my mother who has terminal cancer

Hi PC,

Long time reader and contributor, never thought I'd be making a post like this one though. Over the last few months I've found myself in an unfortunate situation where my mother has pancreatic cancer and does not have long left. It's happened very quickly, we're thinking weeks not months left now. My mother is already in hospital. We've only just come back from visiting family overseas where she was still in good spirits.

She is 59 years old and retired immediately on discovering her terminal diagnosis about 2 months ago. I am one of two adult children (25 and over) and my father is retired and 61 years old. What important considerations are there for us to organise whilst she is still alive?

• Will. We have not done this yet, but want everything to go to my father. There won't be any contention here, my brother and I will not fight over my mum's / parents' assets. What exactly needs to happen here? We will chat to a lawyer tomorrow but it would be good to get an idea. I'm aware my mum needs to appoint my dad as the executor? Are there any problems if in worst case we cannot arrange one in time?
• Designate power of attorney. Does this need to involve a lawyer or can we have my mum sign an online form ASAP?
• Banking and property. Family home title is in my mother's name only, but the family accountant says this should be a fairly straightforward case to go to my father. Loans and other bank accounts joint so no problems there. Major funds / accounts my father should have control over. Any other considerations?
• Superannuation. We are trying to withdraw, but in the meantime signed a BDBN for it to all go to my father so that it's tax free. Any other considerations?
• Insurance. Only one policy in place which is around 40k in death cover in one of her super accounts. Again trying to claim / withdraw but unsure if this can happen before her passing (as it is terminal we can try claim / withdraw). BDBN for it to all go to my father. Does it really matter if I claim before or after her death?
• Accounts and passwords. All recorded. I guess a consideration is accounts that might be frozen upon her passing?

Anything important I've missed?

Thank you all

 

Sorry to hear about your mum. You need to move fast. I have a tax and legal tip on terminal illness situations so try to find those.

best to get a will drawn up asap

without one intestacy laws apply which might require assets passing to children depending on jurisdiction.

get a ePOA done for financial decisions and ensuring guardian for non financial

can be done without a lawyer

get access to phones etc when my mum had terminal cancer she forgot log ins and we couldn’t access her iPhone and Apple couldn’t help either.

beware of non qualified advice from accountants etc see a solicitor

 

Legal Tip 133: Terminal Illness – Legal Aspects to Consider

 

Tax Tips 132: Terminal Illness – tax aspects to Consider

 

It's sorry news to hear, and quite sobering for those of us close to what is still a young age

This is a good one (It's amazing what can be done with one's phone now)
Getting the will sorted is a must
We have a book with all our pertinent details log in' s and passwords in our safe next to all the other important stuff (so it's easy to update)

 

Carefully consider the super issues and sit on hands until you have had solid advice. (Its financial advice) . There may be two forms of insurance so dont race to withdraw. The insurance is then lost.

Many policies are TPD & Death. Its TWO policies. Terminal illness is a TPD event. Death however must wait unless the insurer has a clause thay also considers a terminal illness diagnosis. It usually needs tow specialists to report. She may meet the terminal illness rule and satisfy a TPD claim NOW. Withdraw that. Then wait. A death claim then may occur. If you close the fund this benefit or both could be lost altogether And you cant blame the fund.

We had a recent client in that position. He was a shattered man but left very happy. He didnt even consider he had $1m of TPD and $1m of death cover. He was able to structure his will based on this and the terminal illness claim approved and paid quickly. He personally discharged his home loan etc.

Think about clubs and health insurance etc. Some have death benefits or assist with funeral costs. Involve her in planning wshes for funeral etc

 

Sorry to hear about your situation, as Paul said above you need to get some financial advice on the insurance and superannuation side of it. Your mum's fund may be able to provide this or you may need to go see a third party and they can review.

The fund may or may not pay early as a terminal illness benefit and it varies depending on the policy conditions and whether your mum has Death and TPD or Death only. It could be things like an advance of the death benefit, the higher of the Death or TPD, or potentially you have to wait. There are also different evidence requirements and tax outcomes so make sure you at least speak to the fund before anything else.

Regarding the payment of the benefit to your father, there's also considerations for him long-term of whether the funds are kept in superannuation and the best way to achieve that. Options include things like a death benefit pension, or lump sum and re-contribution, or may out of superannuation altogether. Again personal advice is needed, but even at such a tough time it can be good to plan for this now.

 

This only works if the TPD is standalone or the client has additional options like double TPD or death buy-back. TPD and Death are two different covers but not necessarily two policies. In fact the most common structure is that the TPD is linked (sometimes across multiple policies) to the Death cover as it makes it far more cost-effective.

If the TPD is linked to the Death cover, any TPD claim will reduce the remaining Death benefit and then if the option exists and the client survives any required timeframes then they may be able to reinstate the Death cover.

 

Thats why you check. You never know what date or conditions affect the policy.

 

Thank you everyone for your thoughts and comments. I will look into all of these and am very grateful for the support and feedback.

I've called up the superfund and believe for this policy in the event of terminal illness it falls under Death cover. Regardless it seems the TPD and Death cover are linked and come from the same pool of funds.

https://www.youraccountonline.com/c...tant-information/MT999_Insurancebooklet_1.pdf

It's not a huge amount of cover anyway, around 40k with Mercer Super Trust. The balance in this super account is 50k. The other is AustralianSuper which has 200k but has no insurance in place. I will try and claim with Mercer before I have that account released. Does it make a big difference though if the claim is before or after her death?

Another policy she has in place via her employer is Income Protection which has a 90 day waiting period (not reached yet). However, it also does have a death while on claim benefit for a lump sum equal to 3 times the amount of the benefit payable for a month prior to date of death

This is a good one thank you. I will keep an eye out for this. But I think she doesn't have any other policies in place other than Extras cover (no hospital cover)

 

Thank you. What are the main benefits of keeping it in the super fund and drawing it down as a death benefit pension as opposed to a lump sum withdrawal? We're thinking of drawing it all out of my mum's super whilst she is alive if possible, otherwise it will go to my dad via BDBN (which is when he'd be presented with the option of lump sum or pension? - we're thinking lump sum).

 

Agreed definitely worth checking, just was throwing some caution out because there is a bit there which can be confusing and it implies that most policies will allow you to obtain both Death and TPD benefits by default under a terminal illness which is definitely not the case - it requires a very unique setup that is normally selected purposefully.

 

It can depend on what your dad wants to do really. Retirement phase of super can offer plenty of advantages with tax-free pension payments and nil earnings tax etc. but that doesn't necessarily mean he has to take it as a death benefit pension to achieve this as lump sums can potentially be recontributed and things like that.

As I said above it's definitely worth getting some comprehensive advice. It's likely that one of the super funds you are dealing with would have financial advisers who can provide comprehensive advice, or you could search up an adviser with one of the associations.

 

Regarding super with death benefit policy I called Mercer again about lodging a claim. For the death benefit to be released under terminal illness, which it falls under in their PDS (rather than TDP). They said it will take 6 months to process the claim. Honestly it seems quite pointless given the timeframe we have left, I think what will happen is that the claim will be made after her passing and then super released to my father via BDBN. Or would there be a better alternative?

 

That may be the most tax effective

 

Can you draw down from a death benefit pension anytime with any amount? If so it seems better to leave it as a pension than a complete draw down because you can have that flexibility any time

 

I’m sorry to hear that. Hope everything works out well…

 

There would be a minimum legislated amount that has to be taken out every year to meet the minimum pension standards, and then there would be flexibility to draw out as much as required.

It could be better to do the pension or it could be better to do the lump sum, hard to assess without an idea of extended circumstances and not providing personal advice.

 

Paul and Terry, your input to this forum goes above and beyond. Thanks for your contributions, I for one value your posts