Estate planning isn’t the easiest of topics to think about however it is a crucial part of ensuring your family’s financial wellbeing for when you pass on.

Estate planning is so much more than just writing up a will- it’s having a plan for what will happen to each and every one of your assets, and who will handle your affairs after you die; it’s how your family will be cared for financially. Too many Australians don’t even have a will, let alone comprehensive estate planning and this can make the pain of their passing on even more traumatic to their loved ones. Estate Planning is a hugely important part of financial planning, and in this article we will set out the needs-to-know of it.

What is your Estate? 

Your estate is made up of what assets you own- such as your home, investments, savings accounts, your car(s) and your furniture. Your estate also includes your debts, and liabilities. How complex your estate and your subsequent estate planning is wholly dependent on the assets you accumulate during your life.

Why do you need Estate Planning?

There are many reasons for getting your estate planning right. These include:

  • Ensuring that your wealth is passed on to your intended beneficiaries;
  • Protect your loved ones and minimise the risk of having  your will contested; and
  • Minimising or avoiding death taxes.

No matter how complex or simple your financial situation is, there are several key documents and arrangements you need to have in place to ease any administrative or legal burden on your family after you pass.

Some of the key considerations for effective estate planning are:

1.  Maintain an up-to-date Will

A will is a legal document that sets out how your assets will be distributed once you pass on. Your will must be kept up to date at all times, and be properly witnessed to ensure its validity. If you pass on without a proper will in place then your assets will be distributed according to the intestacy laws of your state. This means that the assets you worked hard to accumulate through your life might not go to who you want them to.

As well as being properly witnessed and signed, your will should clearly set out:

  • Who will receive your assets after you die;
  • Who will look after your children; and
  • Your wishes regarding your funeral and burial.

While this last point may seem a bit morbid it’s important to include this to ease the burden on your loved ones.

Your will can be amended if and when your circumstances change, such as when you marry, divorce or welcome the arrival of children/grandkids. Small changes can be made using a legal document called a codicil. If you want to make substantial changes, it’s a good idea to create a new will.

2.  Nominate a Super Beneficiary

This is a very important fact that not many Australians seem to know: your Superannuation is not automatically paid to your estate in the event of your death. That’s right- your family doesn’t automatically get your super monies once you’ve passed on. In order to make sure your family or spouse gets your super funds once you pass on you need to fill out either a Binding or a Non-Binding Death Benefit form and submit it to your Super fund.

It’s important to note that depending on your nomination type (non-lapsing or lapsing), these nominations may lapse every 2-3 years to ensure they remain valid and in line with your wishes.

3.  Nominate your Life Insurance Policy Beneficiary/ies

If you have a life insurance policy outside of super you should be able to nominate who will receive the benefit once you pass on. This person, or persons are known as your life insurance beneficiaries. It is important to make sure that your insurance cover beneficiary is up to date to ensure the proceeds of the insurance payout go where you want it to go.

4. Plan for Effective Tax Management

Your beneficiaries may end up with a hefty tax bill if you don’t plan how they will receive your assets. This is because the way you distribute your assets could have tax implications, including Capital Gains Tax (CGT).

For effective tax estate planning, it’s best to refer to your Financial Advisor.

Other considerations

An important consideration is whether you wholly or partially own your assets. Any assets that you share ownership of should not be in your will. Assets such as property, which could be jointly owned (by two or more parties) will automatically pass to the other owner(s) when you pass on. 

Enduring Power of Attorney (Medical/Financial)

An Enduring Power of Attorney, for your medical and financial matters is another important part of the estate planning process. Unlike a Power of Attorney, an Enduring Power of Attorney has the power to make decisions on your behalf if you become incredibly ill, and are unable to make your own. Many individuals who are diagnosed with early Alzheimers or Dementia appoint an EPoA. Appointing someone an EPoA is a huge responsibility, as they will have total legal rights to make decisions on your behalf about your estate. 

Binding Financial Agreements

A Binding Financial Agreement is Australia’s version of a prenuptial agreement, usually made between partners, but it can also be made between family members. It is an agreement between the parties on how the shared assets and liabilities will be shared once one partner passes on. It can also be used to protect your assets in the event of the breakdown of a long term partnership. Binding Financial Agreements can be contested so it is important to have yours drawn up by professionals, and revised upon significant changes in your life.

Unwanted Beneficiaries

Another uncomfortable aspect of estate planning to consider is that people in your life whom you do not want to benefit from your passing may try to claim part of your estate. It is important to prepare and plan for this, and to structure your will and your estate in such a way that your loved ones are the only beneficiaries. 

It is recommended to seek Financial and/or Legal advice when preparing for this, as your situation will be totally unique to you and requires personalised advice.

How do I start preparing my Estate Plan?

To start your estate planning you need to sit down and get a clear picture of your finances, and of your values. Identify what you have – what assets, what debts, and who you want to pass these on to when you pass on. 

Ask yourself questions such as:

  • What are my assets?
  • What debts/liabilities do I have?
  • How will my debts be paid?

Once you’ve established your financial position, it’s time to think about your family, your friends- and who you want to support once you pass on. Ask yourself questions such as:

  • Who do I want to pass my assets on to?
  • Will I split my assets between my family?
  • Do I want to donate any of my funds to charity?
  • Who do I trust to carry out my wishes?
  • How can I make sure my beneficiaries don’t pay large amounts of inheritance tax?
  • How can I make sure my family don’t inherit my debts?

If you have young children you will need to consider who may be best placed to care for them, and who you can trust to guard their inheritance until they come of age.

In need of an estate plan? We’re here to help! Reach out for a consultation with one of our personal financial advisers via this link.

We would love to HEAR FROM YOU

PHONE: (03) 9686 1784

Follow US

Let's get started. CONTACT US.

Pursue Wealth Pty Ltd is a wholly owned subsidiary of Grimsey Wealth. Pursue Wealth’s Financial Advisers are Authorised Representatives of Grimsey Wealth Pty Ltd, ABN 90 113 911 247 AFSL 293334

Share This
Google Rating
Based on 80 reviews