Constructing an estate plan is crucial to ensure that your financial assets are directed as you wish to benefit your loved ones following your passing, in the way you want, and at the right time.
An estate plan is a legal guide outlining how you’d like your assets to be dealt with when you pass away. By creating a legally binding estate plan, you are essentially safeguarding your assets and ensuring that the legacy you have created will benefit the people you choose in the way that you choose
Why it's important to have an estate plan:
- Prevent your assets from going to unintended recipients.
- Ensure you have control over who cares for your children instead of leaving it to the courts.
- Manage the potential tax burden for your beneficiaries when they inherit your assets.
- Avoid unnecessary family disputes over inheritance distribution.
- Ensure who will take over your business
We have put together some strategies for you to consider that may help you get your estate sorted.
Writing a will
A will is a legal document that gives instructions about how you want your estate to be distributed & managed once you're gone.
Keep in mind, there are things that aren't automatically covered in your will. These include joint assets like property or bank accounts, your super, life insurance proceeds outside super and assets held in discretionary family trusts.
If you die without a valid will, its called "dying intestate" and your assets are distributed according to the legislation of the state you reside in. This removes your ability to decide where your assets go and your loved ones will need to apply to have you estate administered, prolonging the process.
A national survey revealed 60% of Australians - equivalent to 12 million people - do not have a will.
Appoint a power of attorney
A power of attorney is a legal document that allows you to designate someone to act on your behalf and handle your affairs with legal authority. There are different types of powers of attorney:
General power of attorney: makes financial and legal decisions for you for a specific time period; for example, if you’re on holidays overseas. This person becomes invalid once that time period ends or if you lose capacity to make decisions for yourself.
Enduring power of attorney: makes financial and legal decisions for you if you lose the capacity to make decisions yourself.
Medical power of attorney: makes decisions about your medical treatment if you become mentally or physically unable to make decisions for yourself.
Nominate a beneficiary for your super
As mentioned above, your super isn't automatically covered as part of your estate. You may be able to nominate who you want to receive the balance of your fund. There are various types of death benefit nominations, with some requiring your trustee's compliance and others serving as expressions of your preferences.
Make sure you have the right amount of insurance to cover your income, any debt repayments and your family's lifestyle after you're gone.
Ongoing review of your estate plan
You should update and review your estate plan at any time in your life when there is a change such as children, marriage, divorce or retirement.
Estate planning entails various risks and factors that require careful consideration. While we've highlighted a few here, there are numerous others to account for. The specific risks and factors you should focus on will depend on your estate planning objectives, your business, and how you wish to benefit the individuals you've chosen. Contact our office to speak to our team who can assist you in estate planning.