Planning an estate isn’t always easy and for this reason many people don’t get around to doing it properly.
Careful estate planning involves the process of structuring your personal and financial ‘stuff’ so that the right people get the right amount of ‘stuff’ at the right time. This includes ensuring prized personal possessions and financial assets are both distributed according to your wishes.
By having a well thought out estate plan, you can remove unnecessary stress and financial hardship from those you leave behind.
Getting financial and legal advice when estate planning right can help avoid nasty consequences such as:
• Arguments among your family
• Legal challenges by disgruntled beneficiaries (usually family)
• Having a gift in your Will ‘fail’
• Lengthy delays in distributing your assets
• Having your estate eroded by more tax than necessary.
Estate planning involves more than just creating a will, although a will is an essential part of estate planning.
86% of estate claims are made by immediate family members (source: Core Data 2020)
Here are my Top 7 estate planning tips:
Have a Will (and make sure it is current)
Dying without a valid will is a real pain in the backside for your family. It also means that the government (by way of intestacy laws) decides who receives your assets.
Having a current will and documenting how you would like your assets to be distributed after you’re gone is essential in meeting your wishes and will make life much easier for your dependants/family.
Appoint a Power of Attorney
While not strictly related to life and death, nominating a Power of Attorney is important to ensure your finances are managed according to your wishes if you lose mental capacity and cannot make decisions while you are alive. Your chosen attorney should be someone you have a high degree of trust in that will act honestly and in good faith.
A Power of Attorney ceases to have any effect after death.
Know How You Own Things
Understanding your asset ownership is essential to knowing what is and is not in your estate. The legal ownership of assets (e.g., individual, joint, company etc) determines whether an asset that you have some ownership of passes to your estate or vests (is transferred to) with the other owners.
Get Organised
Knowing where all of your records and documents are is great while you are alive and well, but of no use when you are no longer around. Misplaced and missing records are one of the biggest sources of frustration and additional costs for executors of your estate. If you don’t already have all of your important documents filed, stored and accessible ask us about our world-class document vault that will ensure the right people have access to the right information at the right time.
Have a Medical Guardian (Advanced Care Directive)
A Medical Guardian (sometimes called an Advanced Care Directive) is an important way of letting people know your preferences for living arrangements, healthcare and treatment, should you find yourself in a position where you are seriously ill or injured and not able to make decisions.
– A Power of Attorney can make only financial decisions.
– A Medical Guardian can only make health/medical decisions.
Both are needed in an effective estate plan.
Don’t Leave Surprises
Want to have For Whom the Bell Tolls by Metallica playing at your Funeral? Would you like your ashes scattered at the MCG? Do you plan to leave money to a specific charity? Whatever your wishes, make sure you discuss them with your family to minimize the chance of shocks and disagreements while they are greiving.
Understand your Superannuation Nominations
Superannuation is a major investment for most of us, yet many people are not aware that their superannuation does not automatically form part of your estate (i.e. it is not governed by your Will).
One of the fastest growing areas of litigation is in the area of superannuation and deceased estates so it is vitally important to know how your superannuation will be dealt with following your death. The rules (Trust Deed) of a superannuation fund will set out how and to whom a superannuation death benefit payment can be paid. Any life insurance held via super may also form part of any death benefit payment made.
Most Self-Managed Super Fund Trust Deeds have a section on death benefits and time and time again the courts refer to the Trust Deed as the most powerful document when hearing superannuation death benefit claims.
If you have a SMSF, know your Trust Deed.
With a bit of thought, having an effective estate plan is readily achievable for all of us. The challenge for many is making this a priority before it’s too late.
If have any questions or would like help to get started on your estate plan, please call or email me.
What Can Align Financial Do For You? Visit our homepage to learn more about our service. If you would like to speak to us about your financial circumstance, please feel free to give us a call on 02 9913 9995. We are located in Narrabeen on the Northern Beaches of Sydney.
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Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online
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