Episode 32: Estate Planning

Life

Sep 10

August 16, 2021

In this episode we are joined by the lovely solicitor Lucy Percy from Head and Heart Estate Planning. This episode is not just about what is an estate plan or what is a will and power of attorney. It's not even about why it is so important to have all three. Trudi and Sarah instead chat to Lucy about what it is that causes people to put off putting an estate plan in place – like not knowing who to list as a guardian for your children! We also have a chat about where it can all go wrong if you don't keep these documents updated (like the person who had a will giving 100% to their former partner they hadn't seen in 30 years!). Sarah and Trudi have both had first hand experience of the importance of having the right documents in place no matter what your age. If you don’t have a will or know someone who is reluctant, have a listen and find out about some tools that can make the process simpler and less daunting. legal information wills estates power of attorney (mykajabi.com)

Podcast Transcript Available Here

Duration: 30:44

Trudi Cowan: Welcome everyone, to another episode of Financial FOFU. Today we have a special guest, Lucy Percy, who is the principal solicitor at Head and Heart Estate Planning. Lucy has been a solicitor for almost 10 years. working at a couple of different firms but now runs her own practice specializing in estate planning, welcome Lucy.

Lucy Percy: Thank you, Trudi and Sarah, for having me.

Sarah Eifermann: Hey Lucy thanks for being on today.

Lucy Percy: Thank you.

Trudi Cowan: So, we might start if maybe you can give us a little bit more detail about your background and your working life as a solicitor.

Lucy Percy: Perfect, yes that's right I have my 10 year anniversary of being a solicitor coming up. Valentine's Day next year so that is exciting.

Trudi Cowan: Great day to celebrate.

Lucy Percy: I know, it is a nice one to remember, and I think from the beginning it was really clear to me that estate planning and estate administration was where my heart lies. It is such a personable area of law and it just always feels like such a privilege to get to know so much about clients. And you know what their highest values are in life and in-depth. So, yeah, definitely my passion.

Sarah Eifermann: Have you always practiced in this specialty?

Lucy Percy: I have so at the start, I was at a general practice firm and that was an incredible experience and the reason I love having a general practice background is that when people die, we are dealing with all other areas of law that intersect with property law, family law, business law. So it's really great to have that background. But then about five years in, I really started to exclusively practice wills and estates.

Trudi Cowan: Yeah, okay. Nice, nice. And why did you decide to start your own practice?

Lucy Percy: Well, I think, obviously I have a soft, and you know really personable brand or I hope that that's how it comes across.

Trudi Cowan: And I mean, head and heart, kind of.

Lucy Percy: Yeah it's really it says what it is, you know it's written on the box isn't it. Yeah, so I definitely think that this area of law is something where we can do the legal documents and legal strategy and that is really important to get right. But If we don't have those hard conversations, and if we are not taking into account people's values and the actual relationships that they have, then the whole legal plan can be undone. And I've really wanted the freedom in my practice to, I suppose package up, legal and non-legal services and give almost as much weight to the non-legal conversations that we're having and strategies that we're doing with clients, as we do with the legal documents because the legal plan just doesn't work. If the personal circumstances underpinning it, you know, exactly right.

Trudi Cowan: Cool. Can you explain maybe a little more what that might mean for people listening that are going, what?

Lucy Percy: Yeah, great question. So, estate planning to me is a mix of documents that will pass control and take care of you before death, and after death. And it is also a mix of documents that are going to be dealing with assets that are inside and outside your estate. And then the third difference is legal and non-legal documents, so your legal documents might be things like your will and power of attorney, but your non-legal documents might be things like my clients do a very fulsome letter of wishes, and so, you know, yeah, yeah. So yeah, that's an example of how I mix all of those services.

Trudi Cowan: Nice, nice. So, this one, to me, is like common sense but apparently, it's not common sense so I'm going to ask it for the benefit of everybody. So this question is why do you think it's important to have a will and a power of attorney in place?

Lucy Percy: Yeah, absolutely. I think I'm going back to basics. We can't have these conversations and so don't apologize for it being a basic question. A power of attorney will let somebody stand in your shoes and manage your finances and health decisions. If you can't do those yourself. The really important thing for people to know is that for financial decisions, there is no next of kin, right. So, I'm married, but if I did not have a power of attorney letting my husband manage my personal and financial affairs, he would have to go to the VCAT to get an order, so it's not a simple process. If you don't have to document.

Trudi Cowan: I think that's something that people really need.

Lucy Percy: Yeah, I think that next of kin. I think people assume there's a next of kin right and they're just isn’t, so hopefully that, you know, it says enough about that for people to understand why you need it.

Trudi Cowan: And especially I suppose as well if you're running a business because that's a common one where we see where they think that there is a right for the spouse to take over. That's assuming that the spouse has the knowledge and the capability to take over the know-how, but then if there's no actual next of kin, right, that leaves everyone in a pickle, trying to resolve what's going on.

Lucy Percy: Oh that's yeah, runs up cost and complexity. And that is, assuming that the right person steps forward as soon as you have, you know, maybe an ex maybe you're in a new relationship. Maybe you've got parents but you actually want to appoint a new partner, you know, assuming that the right people step forward, but as soon as there's conflict about who should actually be in control, then you've got a really big problem on your hands. Yeah so, powers of attorney, they cease.

Trudi Cowan: Once a person dies right?

Lucy Percy: Correct, yeah.

Trudi Cowan: That's when the will takes over?

Lucy Percy: Yes, so yeah that's right there's a really clear distinction when I do my meetings with clients I say, I want you to think about the first half of the meeting we're going to talk about if you've died and the second half of the meeting we're going to talk about if you're alive but can't make decisions for yourself. And so you can't assume that having one will mean that the other is taken care of.

Trudi Cowan: Yeah, absolutely. It's really interesting, I went for a walk today with a friend of mine and he asked me what I was doing this afternoon I said I'm recording a podcast, he was like, Okay, what's it about, and I said all about wills, powers of attorney, and why you should have one, as opposed to just the structure of them per se, and I said to him, Have you got a will? and he goes, Yeah. And I go, when was it last looked at and he goes, Oh, I had a will, when I was with my ex-wife and I was like, you've been divorced for five years. I mean when. Holy shit.

Lucy Percy: Yeah, good point.

Trudi Cowan: And I was like you maybe want to get on to that. so I mean it's not something we talk about commonly and for me, it would be common sense especially with my financial background that if you were doing a divorce settlement and splitting you would therefore redo your powers of attorney, and you would redo your will to your new wishes because right now I think his ex-wife gets everything.

Lucy Percy: Yeah. It is, yeah, Some of my best referrals as a family lawyer, and it certainly should be top of mind, the real risk period is actually the time between separation and divorce. So, or if you've been in a domestic relationship but you didn't get married, then you can't rely on that divorce event in the future, you know, maybe a legal change so it's, I actually did do an estate administration once where the person's ex, they hadn't seen them for 30 years, they were the sole beneficiary and sole executive, and then you put that border claim against them, and the starting position at that mediation was the court was saying, although mediator and the barristers for the other side were saying he had 30 years to update his will, we don't presume to know what he wanted to do, he had a chance to change his will, he didn't. We have to assume he wanted the ex to have 100%. So it's just fascinating. You know, people think that we can impart a little bit of common sense at the end, but we can't, what we can do is deal with the law.

Trudi Cowan: Well, that's huge, obviously big life events like divorces, weddings, marriages are times when people would think okay maybe I need to update the will if you haven't had one of those big life events how regularly should you be thinking about revisiting your wills and your power of attorney?

Lucy Percy: Yeah, great question and I will give a little bit of context to that so that the example that I gave that 30 year period. The reason they didn't have a divorce event or one of them was, and they were a same-sex couple. And so before they could get married. You know, there was no divorce event, so you know there's a whole new group of people out there who really need to review. So I recommend it every year, annually. I should share my client checklist on my website. And the reason why we say every year is that even if your circumstances have changed, the law might change in relation to your circumstances might change so there might be a tax change, or the definition of a partner or an eligible person to claim might change.

Trudi Cowan: Yeah, that's a really good point that I suppose is often missed because people don't live in the space that you live in. Yeah, and it's difficult, as far as I can tell it's like with credit in my space like they literally change every week in credit and people think oh, it's the same as last time I applied for a particular type of loan and it’s not.

Lucy Percy: Absolutely so and you'll never do any harm by spending 15 minutes checking. So yeah, definitely, it should be a priority. I know that that's difficult for people but I think once you diarize it, or I know a barrister who works in this area and she reviews her will every year on her birthday. Interesting birthday gifts.

Trudi Cowan: So, can we raise a point here, my first thought when you said that was geez that's morbid, pun intended morbid, but can we talk about potentially because a lot of this stuff we talk about is the mindset and how we ended up here? We, it's some of the financial stuff that we talk about is led through from shame, the shame of not understanding shame of not knowing, the shame of not knowing how to fix the problem so it's the ostrich head in the sand style outcome as a result, with the clients that you see, it may not be shamed that prevents their position, but it may be another emotional place that stops them from dealing with these really important things that they should do, what do you often see?

Lucy Percy: Yeah. Yep, I'm so glad you asked that because it's not that we don't know how to do the documents, and we don't know the first steps to take. It's why we find it so hard to engage. Shame is what I talk about as well.

Trudi Cowan: Okay, wow. Okay.

Lucy Percy: So I think for a lot of people there is a shame that they are not in the financial position they want to be in. And think about life for their kids or their partner or you know, a lot of people support their parents if they think about what life would look like if they were gone, and they are not leaving a financially secure picture behind. That can be really stressful, or the shame of going, who can I appoint as a power of attorney, or executor, and I don't have enough people in my circle to trust and that can be a really painful thing for people to confront. And so yeah definitely just trying to, you know, avoid feeling those feelings by just not engaging in the process in the first place.

Trudi Cowan: I had a discussion recently with some girlfriends and we were talking about wills and who we were going to appoint as guardians for our kids. and one of the girls was saying you know well, I don't want to not appoint my parents because I don't want to offend them, I'm like, but they're great grandparents they got to be in the kid’s life.

Lucy Percy: But are they your first choice?

Trudi Cowan: And I said, you know, don't worry about who's going to be offended, you got to worry about who's going to be the best.

Lucy Percy: That's right. Yeah.

Trudi Cowan: You know, I don't want to do it because I don't want to annoy someone and pick somebody up by putting the wrong person in but I think the wrong way to look at it.

Sarah Eifermann: I think what really helped for me when I made my decisions, was to, which is what I do when I make any decisions really, is to try and take the emotional place out of it and say what's in the best interest of me or the client, and you know that that's one of the reasons that I appointed you my financial power of attorney. And I appointed two friends as my medical powers of attorney, because I picked people that could make decisions that would be in my best interest at the time, and that wouldn't fall apart. So then my medical powers of attorney, you're my financial plan for the same reasons is that they'd be able to do that and the same thing I made my executive my solicitor.

For the same reason, because I didn't want the burden then placed on them from an emotional point of view, the last thing they need in dealing with the trauma is then to have on top of all of that breakdown of the estate or making medical decisions or, you know, and I suppose, making the wrong medical decision or the wrong financial decision is a burden as well so if you can look at it from a non-emotional point of view when you decide who's going to be there for you had the conversation with them. I personally found that really helpful and maybe it's something for those that are sitting out there listening today going, I just don't know who that potentially could be, it could be one of your trusted advisors already.

Lucy Percy: Well, that's it. for people who don't have a power of attorney or an executive or appoint. I think a lot of people don't realize that you can actually appoint a professional, and they can be paid to do the job.

Sarah Eifermann: Exactly.

Lucy Percy: We do, you know, recommend that in all reserves that serve genuine situations, there might be other solutions that your lawyer can come up with. a group of people, but with some really adequate conditions and limitations. So, yeah, it's interesting and it's funny that you say that that helped you and it's such an individual thing, for me, I really lean into the emotion, and ask about. so for me personally, I say to people, it's either going to be too hard or you want to, you know, approach it the way you have or let's lean into the emotion and say How would it feel for someone to be left behind, but to not have any control, you know, to have suffered a trauma but not be part of the outcome of the decision making, might actually be even harder. Yeah, so it just depends completely on the client and that's why I really advocate using a lawyer because we can have these conversations with you, and it's not, you know you're not going round in your mind in a vacuum.

Trudi Cowan: But it's part of the process though, right? Unpacking it all. And say what's the right thing for yourself and those that are left behind, or still around depending on circumstances right?

Lucy Percy: One of the questions that I ask people is when they say this person would be a good executor and I said great, do they put the tax returns in on time? Right. They might be a nice person, you know, but tell me if they get a speeding fine or a parking fine do they address it?

Sarah Eifermann: Yeah, Because it's a big job it's not a simple job.

Lucy Percy: Yeah, and you need to talk it through. So, you know, that's why I'm not really in favor of the, you know I mean well kids obviously but even the online thoughts, which might have a really great decision making trees, but there's still no human talking to tell me about that person.

Trudi Cowan: Yeah, and helping you decide if they are the right person.

Lucy Percy: Absolutely, yeah.

Trudi Cowan: So, having talked about all of that, I mean, obviously, you would say I mean I've seen where there's been no will in place. How can it go wrong? What are the things for people to look at by not changing their behavior and doing all of this, I'm getting it sorted, what can go wrong?

Lucy Percy: So the first thing that I'm going to comment on, I'm going to say is that it's about who's in control. So, even before we talk about the wrong person making the wrong decision to your attorney, or your, you know executor if you don't have a will or power of attorney. The first issue is what if more than one person wants to apply and act. And then we've got a conflict you haven't got out of the starting gate. And you've got a 20 grand conflict because different people want their interests protected so different people

Trudi Cowan: So Lucy, can we go back just a step, I understand what you're talking about, can you explain what you're talking about where there is no will therefore there's no control.

Lucy Percy: Yeah so, where you don't have a will. Your next of kin is supposed to apply to the court for what is called Letters of administration, and that letter is a signal to the rest of the world that this person has the power to stand in your shoes and manage your affairs after your death. It's not always straightforward about who should apply to be your administrator, or maybe the next of kin is not who you would have chosen, and so they might technically be your next of kin, but you wouldn't trust them. So an example would be an ex-spouse or a partner you've separated from. they might still be your next of kin if you haven't divorced, could you think of anything worse than them, applying to be the administrator of your estate.

Trudi Cowan: Yeah, yeah. So many blended families these days. There'd be plenty of different examples of your next of kin not necessarily being the right person.

Lucy Percy: Yes, thank you for bringing that up. I wasn't going to say that, you are so right where we've got these baby boomer clients and they want their adult children, to you know to be executor and attorneys together, but maybe the next of kin would be that second spouse or partner, and you know it's really complex.

Trudi Cowan: Yes. Yes, I mean that's an example where it needs to be thought through, and I know even my dad for Medical Power of Attorney wanted to make all three of us joint powers of attorney medically. I said no, no offense, dad. But no, because, well, You need to be able to make a decision when, how do I make a decision with two other people and they've got spouses that are talking to them and we struggle to get along sometimes at the best of times, let alone, you've got a medical emergency where I need to make a medical decision in that, that we all need to agree on. I said get a primary and get a secondary. I'm happy to be either, but I will not be a joint, and he just went, Oh.

Lucy Percy: Yeah, yeah, such good advice, and yes so and you are correct. So, in Victoria, your approach is actually the law. So in Victoria, we can only have one medical treatment decision-maker at a time, in Queensland and New South Wales the guardians can be jointly, but yeah your approach is just so correct because we need to be able to, someone needs to have clear authority. And then I just always say that again about executives don't have all your children just to flatter them. Yeah, all you will do is run up estate costs. If the relationships,

Trudi Cowan: Is going to cause conflict.

Lucy Percy: Correct, yeah,

Sarah Eifermann: Trudi, it goes back to what you said earlier with the Guardian question, don't be like, don't be that kind of remember I'm trying to say here, but

Trudi Cowan: Trying to pacify everybody and keep them happy. Yeah, it's just what's best for you and your estate.

Lucy Percy: Yeah, not to flatter people, you know, we really are looking at what would be best for your children. And I have an excellent resource for people who would like help choosing a guardian for their children. I have observed that it can be other things that hold them back from starting to do their will.

Trudi Cowan: I'll definitely agree with that. I have a lot of people with kids. yeah just seem to hold up because they can't decide. With whom I'm going to appoint the guardian.

Lucy Percy: Yeah, so I've got a really great resource, it's only 25 minutes in videos and has a couple of downloadable things, it’s free, but my first tip is and this is one of my clients asked to change your mind. So, I said to my clients. Let's leave it out of your will, I would prefer to see you have the rest of your estate plan done, and no one appointed, And then you can come back to me within the first year and we can add it in later for free. Or put who your instinct is telling you is the right person and if you change your mind in the first 12 months again, I'll swap that name out for free. It's really not difficult. In the age of Word doc you know we're not working off a typewriter anymore.

Trudi Cowan: I would hope we are not.

Lucy Percy: So your lawyer should be able to offer that flexibility if you ask for it, they might just have simply not thought about it. so if that's how you can ask your lawyer.

Trudi Cowan: You make a good point that it's better to get something in place. it's not necessarily complete for them to have nothing at all.

Lucy Percy: Yeah, yeah, definitely.

Trudi Cowan: Yeah. Awesome. So do you encourage clients to leave messages for loved ones as part of their estate plan?

Lucy Percy: Thank you, yes, I do. So that is one of the non-legal documents that I highly recommend everyone does. It doesn't have to be a certificate, it can be as simple as just making voice memos or short videos on your phone and letting them know in your later wishes where they are kept in storage. But I also have a resource that is 100 questions that you might want to work through and just answer one or two of them. The greatest example of what I'm talking about that I've seen recently is, I call it a legacy of love.

Trudi Cowan: Nice.

Lucy Percy: Yeah. And what made me want to do that or encouraged clients to do it is that I've observed that you know when, clients lose a loved one and they come to me all I've got is the legal documents and sometimes I would go back through my notes from the file, file notes from the meeting, and I could see all these really lovely things that the clients have said about their family in our meetings and I felt I wish I could share that with them, but better than that you know clients should leave their own messages. And I'm also in a Facebook group called motherless daughters, Australia. So, having lost my own mum when I was only 22 and I have asked you know the nearly 5000 Women in there, what would do much for your mum. Before she died, and everyone just says, I just want to hear a voice and see her face just something.

Trudi Cowan: Yeah. And in this day and age, it is getting easier and easier to do that stuff.

Lucy Percy: It's so easy and I think people think that they have enough in their phone but you know I challenge you to open up your videos on your phone, and there'll be none of you, or my dog videos themselves. Yeah, making the exception with all my Instagram Stories.

Trudi Cowan: Yeah but that's, you know, that's a generic, that it's a generic message. It's not, yeah, it's not personalized for that person and I think, again we take for granted how long we may be here for and we don't put the things in place that would just make the transition easier for everyone. And there are little things that can be done. So, Lucy, what do you tell potential clients that are hesitant to spend the money to get this sort of document prepared because one part is obviously the mindset around not knowing what you know we talked about earlier, the other part potentially is perceived cost.

Lucy Percy: Yeah, okay, that's a really great question. Thank you. I mean, obviously, you know, I call it an investment. And generally speaking, most of my clients walk in after a free 15-minute chat and so I can really explain to them what would really happen in their personal circumstances. so let's assume that my maximum package is about $4,000. I could really explain to you how you would save that money in tax benefits, or save that money by avoiding a dispute that, in a two page will, I can see that a clause isn't correctly done so I can talk to it technically and explain it, but I suppose the simplest way to explain it is. that when you work with a lawyer who specializes or is an expert and practices only in this area of law, you can have a really high level of confidence that the documents are going to work when you need to rely on them.

Right, and I give the analogy that my husband's electrician, and after a day's work when he leaves the job site or at least a job that he has gone to fix something, he turns the mains back on, and he can either switch the lights on, or he switches the main on, you know, nothing comes on, he gets to see at the end of his day, if the work that he did was effective or not. If you use a will or even a lawyer who doesn't practice in this area of law. You're not going to know if your strategy was legally effective was tax-effective, dealt with your super in the right way, and avoids conflict and litigation, you're not going to know that until you go to rely on documents, and so it really is a case of having this investment, so that you can rely on and your loved ones can rely on the documents when they really need to.

Trudi Cowan: Nice. We all probably know someone that is a little bit hesitant to get their wills or powers of attorney done, what can we do to encourage our loved ones to go and get these documents done?

Lucy Percy: That's a really great question and I mean I suppose my own approach is to give people time, so I know that with everyone's best intentions, I think that the average time that people sort of think about me, come across me, and then engage me is about six months. So I know that I have a service that has a really long consideration phase so it's not simply mentioned at once, and you're done or go hard in one big conversation that you know it's irresponsible not to have it, etc etc. My approach is to just be gentle and to keep bringing it up, you know, how did you go with this. My free guardianship course suggests that you do it with a buddy, you have an accountability buddy.

Trudi Cowan: Yeah, I love buddies and I love accountability.

Lucy Percy: Me too, I'm a people pleaser I'll do it if I've committed someone else,

Trudi Cowan: It's always the right mindset again though when you feel somebody is going to come back and ask you about it. Yeah, you do it, more anxiety.

Lucy Percy: Yeah, I mean just let your financial planner, your accountant, you know, let them keep you accountable, or simply engage whatever lawyers you're thinking of reaching out to. have their free chat, ask for their prices, it's just one foot in front of the other, and you know you will slowly get through the process. It's their job to take you by the hand and, you know, guide you through. So I think just don't be afraid of asking about the service, and I don't you know there's no hard sell. But we do know that once you reach out and you ask you, sort of, you know you do take the next steps naturally.

Trudi Cowan: It's always that step that's usually the hardest.

Lucy Percy: It is, yeah.

Trudi Cowan: Now, we're sort of getting close to running out of time so just want to ask one last question, which is that I know that you’ve actually developed a course to try and make some of this process a little bit easier for people and help them to answer some of these questions. Could you maybe just tell us a little about that?

Lucy Percy: That's true. Thank you so much. Yes, what I observed was that in that consideration phase. People identify they've got a problem, and then it feels like there's nothing in between knowing you've got a problem and it’s keeping you up at night. And engaging a lawyer for several thousand dollars. And what I wanted to do was make it available at a really cost-effective price so it's $149. It costs may be 15 or 20 minutes with a lawyer, it's really affordable. And what I share in that is everything that I share with my clients at my first meeting, I haven't held back on any strategies or information. I want people to have this information, I can only work with so many people, and for me too. I don't know, I suppose, has an impact on my business sharing what I know, and having that person go and work with an

other lawyer just doesn't worry me.

So what I share is, what is an estate plan, and why do you need one. And so, you would both know, one of the main reasons is, trust and things outside your will, and so we need to bring in people who just do not know that. And then we also talk about the benefits of using a lawyer, so that's actually a really short lesson but I hopefully convinced you that it’s worth spending the money. Lesson two is all about your will, so we share what an executive does, what makes a good one. Choosing a guardian of your children. What’s a testamentary trust? Different types of gifting. And there is another topic, but yeah so we do your will and then Lesson three is about the enduring power of attorney for financial matters, and lesson four is all about your medical treatment decision-maker or guardian. So, it's literally everything that I share with my clients in my first 90-minute meeting with them.

Hopefully, it lets people sit at home and learn for themselves what they need to know why it's important. Maybe it's a great resource to help them discuss it with a partner or spouse who's even more hesitant about spending the money seeing a lawyer. So that’s how I see it fitting into the picture.

Trudi Cowan: Nice, nice well. Any other final tips to share with our audience? because we really are out of time today. any last tips or things or thoughts or words of wisdom?

Lucy Percy: Yeah get started, and if you already do you have a will I think I'm treating your comment about encouraging friends and family, you know if you've already done it you'll know how important it is, and please help the people around you.

Trudi Cowan: Fantastic. We have had Lucy Percy on today from Head and Heart Estate Planning, we'll put the link to her site in our episode bio so you can check that out if you need to. Thank you so much for joining us today, Lucy.

Lucy Percy: Thank you, Sarah and Trudi. Thank you so much.

Sarah Eifermann: Cheers, you've been listening to Financial FOFU. I'm Sarah Eifermann.

Trudi Cowan: And I'm Trudi Cowan.

Sarah Eifermann: Bye.

Trudi Cowan: Bye

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Just two industry experts (and guests) having a friendly chat and sharing our knowledge. We aim to raise your knowledge base and dis-spell any myths surrounding finance. tax and a range of other financial topics.

This is a safe space to ask questions and hear useful info on financial matters.

Episode 32: Estate Planning

Podcast Transcript Available Here

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