Living wills are an integral part of estate planning.
There can be few situations as distressing as the need to make hard decisions about the end of life of a loved one. When life – of any reasonable quality – can no longer be preserved, at what point should measures to prolong that life cease?
These questions become particularly relevant where a person is unable to communicate their wishes, for example where they are in a coma or have lost their decision making capacity
When distraught family or friends face this dilemma, making decisions about whether to withhold or withdraw life sustaining measures are clouded by emotion. It’s difficult to always consider the choice the patient would want family, carers and health professionals to make. This is where a Living Will can make an important difference to a quality outcome for clients and their families.
What is a Living Will?
While most people are familiar with the purpose of a Will (which sets out a person’s wishes in the event of their death), the concept of a Living Will is less widely known or understood.
Sometimes called an Advanced Care or Advanced Health Directive, a Living Will details an individual’s wishes in relation to their medical treatment decisions in the case of serious illness or accident.
Such wishes might include that individual’s attitude toward:
- resuscitation if their heart stops beating
- life-extending treatments such as artificial breathing and feeding
- being able to die in their own home (where practicable).
A Living Will (which can work in tandem with, but is not a substitute for, a Power of Attorney) can be shared with their family or carer, as well as health professionals, and removes the burden of making tough decisions from caregivers. It can also be included in the new Personally Controlled Electronic Health Record (PCEHR), which can be accessed by healthcare professionals around Australia.
Pros and cons of making a Living Will
On the face of it, a Living Will seems a logical addition to the estate planning toolkit. It can:
- ensure that the wishes of the individual are known
- allow religious and cultural requirements to be observed
- provide guidance to healthcare professionals
- help family members with a difficult decision at a time of emotional stress.
There are a few challenges however, not least that there are no uniform requirements when it comes to making a Living Will. A 2013 analysis by Choice magazine[1] – who consulted with the Australian Law Council and the Australian Medical Association – found there was no national legal definition of Advanced Care Directives, and only South Australia, Western Australia, Victoria and Queensland have specific laws pertaining to them, and the validity in one state of a Living Will made in another is legally an uncertain area (the WA Department of Health[2] answers this question by simply saying ‘it depends on the laws of that particular state or territory’.)
Another issue is that no one can predict future medical advances and the effect they will have on specific conditions, meaning these can’t be taken into account by a Living Will made today, potentially limiting an individual to an unnecessary outcome.
Who can make a Living Will?
The specifics depend on your state of residence, but generally require that you are over the age of 18, understand the decisions you are making and are able to communicate those decisions.
Some states have specific forms that can be used, like this one provided by Queensland Health, although they aren’t necessarily mandatory.
When to make a Living Will
As is the case with traditional wills, the uncertainty of life means the answer to this question is always ‘as soon as possible’. Pragmatically however there are particular times and circumstances which create extra impetus to put such an instrument in place. For example, on the eve of hospital admission, where someone has a medical condition that could impair decision making ability, or they have a chronic medical condition that may carry complications such as asthma, kidney disease or diabetes.
Living Wills and Estate Planning
Estate planning is a critical component of any financial plan; as well as accumulating assets and supporting oneself in retirement, it’s important to determine what happens to those assets – and the client – once that client is incapacitated or dies. In this sense, it is clear that a Living Will can be an essential component of a client’s plans to ‘future proof’ themselves.
In tandem with a Living Will, a client would typically put in place a Medical Power of Attorney, granting a specific individual the power to ensure the directives expressed in the Living Will are followed.
Whilst some advisers will undoubtedly question the appropriateness of becoming involved in this topic, those advisers who have moved beyond a narrow frame of expertise to be seen by their clients as a truly trusted advisers are ideally placed to assist in such a process. That assistance may range from simply raising the matter to engaging family members to ensure the contents of the Living Will are known and understood by those who may have to act on its contents.
Other elements of estate planning that you can help your clients with include:
- Making a Will – whether using a will kit or having a will drawn up by a solicitor
- Binding Superannuation death nominations – these binding nominations take precedence over nominations made in a will for superannuation monies, so it’s important not to assume that the will covers everything
- Testamentary trusts – these are generally set up to protect assets in situations where the beneficiaries are minors or have diminished mental capabilities
- Powers of Attorney – these vary from state to state and generally cover financial, legal and medical affairs in a situation where the individual is incapacitated or unable to make their own decisions.
An illustrative case study
75 year old Norman was admitted to hospital suffering a serious stroke. A week later he remained on life support and doctors rated his chances of ever regaining consciousness as low. Several years previously he had told his wife Beth that he didn’t want to be artificially kept alive, especially where the chances of being able to recover and live a normal, independent life were negligible. Norman had previously given a Power of Attorney to Beth, giving her the ability to make decisions about his healthcare, however he had never committed to his specific wishes in writing (as he could have done with a Living Will). This became problematic when Beth – acting on Norman’s wishes – wanted to withdraw life support; whereas the couple’s adult children disagreed with her decision, causing a great deal of distress to all involved. This prolonged the amount of time Norman remained on life support until the children reluctantly agreed.
If there had been a Living Will to work in conjunction with the Power of Attorney, the process would have been quicker, cleaner, and a major rift with her children and grandchildren would have been avoided.
The Estate Planning opportunity
Research[3] by the West Australian Public Trustee found that less than 20% of families with young children had a valid will, a figure likely to hold across Australia. This belies the estimated $70 billion in household wealth that will be transfer by bequest by 2030.
Undoubtedly, socioeconomic and cultural trends will see the relevance of – and demand for – estate planning services increase, and that demand will not just be limited to older Australians.
Your role as the central hub in your client’s financial affairs makes you ideally placed to facilitate these services, in tandem with appropriate subject matter experts (who may be external to your practice).
The advisers who have most successfully built Estate Planning into their value proposition are those who have actually embedded it in their standard advice process, rather than positioning it as an ‘add-on’ for select clients (which needs to be ‘sold’ as such).
If you are unsure about the value of making Estate Planning part of your proposition, consider the following:
- It can uncover new opportunities for advice with your active clients
- It can be a cost effective way of re-engaging with inactive clients
- It can be an easy to articulate, high value add proposition to take to your referral partners
- It can add significant flesh to your proposition and can be reflected in your Fee Disclosure Statement.
Advisers serious about broadening their offering to incorporate Estate Planning should consider partnering with a provider who can offer educational support, practical tools as well as a product set suited to this field of advice.
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Notes:
[1] ‘Living Wills’, choice.com.au, January 2013
[2] WA Department of Health website, http://www.health.wa.gov.au/advancehealthdirective/consumers/faqs.cfm#21
[3] “Public Trustee finds most Western Australians have no valid will”, ABC news online, May 2014.