Estate planning isn't something people like to think about, but it's one of the most important things you can do to ensure your loved ones are taken care of. It allows you to make decisions about who will care for your dependents – or for you – or manage the complexity of blended families. By considering tax implications, it can also help preserve and maximise the value of your estate.
Get your will sorted
It's estimated around 60%1 of Australians do not have a will.
If you die without making a will, your assets will be distributed according to the intestacy laws of your state2, which means they may not go where you want them to. If you do have a will, remember to regularly update it and discuss the provisions with your beneficiaries. Having these discussions now can help avoid challenges to the will later, which can result in considerable costs and lengthy delays in distributing assets.
Superannuation
Different funds have different rules when it comes to paying out your death benefit. Your superannuation balance will usually be paid to your dependants or legal personal. Dependants can be defined as any person who is financially dependent on you, such as your current spouse or partner, your children or any other person who relies on you financially. If you don't have any dependants, the total balance will be paid to your estate and dealt with according to your will. Nominating beneficiaries ensures your superannuation will be distributed to the beneficiaries of your choice.
Life insurance
As with superannuation, it's important to nominate your beneficiaries to ensure the payout goes to the right people. You might also investigate whether your policy includes funeral insurance or a funeral benefit, which could help your family manage funeral costs at a difficult time.
Health care directives and power of attorney
An enduring power of attorney (EPoA) lets you nominate someone to make legal and financial decisions on your behalf if you're incapacitated3. It's important to choose someone you trust and get legal advice to ensure the EPoA is legal and binding.
Consider your children
If something happens and your children aren't of legal age, can you be sure they'll be looked after the way you want them to be? If there are no specific guardianship instructions, any person with an interest in your child, including grandparents, aunts and uncles and even cousins, can apply for guardianship.
This means your children may end up being looked after by someone you don't necessarily want involved in their care – this could even be the Public Trustee.
Where to now?
There are a few steps to the estate planning process:
- Create a list of all assets that form part of your estate, including property, art, personal assets, cars and valuables. Separately, list out any trusts, superannuation and life insurance where you may need to nominate beneficiaries.
- Consider the debts associated with each asset.
- Identify any potential risks that may arise, such as death, divorce and mental incapacity. Talk to your solicitor about mitigating these, and don't forget, we can help you too.
- Make decisions about where you want your assets to end up. This is something we can walk you through, so you feel confident in making informed decisions