The greatest gift you can give to your loved ones is a clear pathway for them to follow if you become unable to make decisions at some point, and a structured plan in the event of your death so in their time of grief they are not burdened by unnecessary processes. It can also provide great comfort to you, knowing your wishes will be upheld.
Estate planning is the process of deciding what happens to your assets and possessions after you pass away. It can be a challenging and uncomfortable topic to approach, but it is crucial for everyone, irrespective of their asset pool. It is also important to review existing estate plans when your circumstances change. For example, marriage revokes a will, whereas divorce might revoke only parts of a will, depending on the State or Territory you reside in.
Estate planning also includes managing your assets in case you become incapacitated during your lifetime.
Why is Estate Planning Necessary?
Estate planning is necessary for everyone because it can help avoid family conflict, minimise taxes, care for those with special needs and distribute your assets based on your instructions. Estate planning enables you to make decisions best suited to your values and goals, allows you to care for your loved ones even after you pass away and, in some circumstances, ensures your wealth will be preserved from generation to generation.
What are the Facets of Estate Planning?
Many people are under the illusion a will is sufficient in terms of passing on your assets. Sadly, this is not the case. Furthermore, you should have plans in place if you can no longer make decisions. Estate Planning is a holistic approach which includes all the documents needed to ensure your
- Will – this is the foundation of your estate plan and appoints your executor/s and provides directions for the distribution of your estate assets (not all assets are estate assets, for example superannuation assets are NOT estate assets, but dealt with by the superannuation trustee, it is essential to understand which assets, if any, are not estate assets, and how these assets are dealt with).
- A will can also advise on your funeral arrangements and detail the guardianship of your minor child/ren. Without this provision in your will, the Family Court will make a guardianship decision.
- Establishing a Trust – this may or may not be required as it depends on your circumstances. There are several types of trusts including one set up within the framework of a will, called a testamentary trust. These can be used to protect your assets and to minimise tax. Further information on trusts can be found here.
- Power-of-Attorney – a document that appoints a person, or people, to make legal and financial decisions should it be required.
- Enduring Power-of-Guardianship – similar to a Power-of-Attorney, but for medical and lifestyle issues.
- Advanced Care Directive – a document that provides clear directions to medical practitioners if you cannot articulate your wishes directly.
- Superannuation binding nominations – a directive to your super fund about the distribution of assets held in your fund.
Seek Professional Advice
Estate Planning is one of the most important things you can do to ensure your wishes are understood and actioned. It can be challenging, but seeking professional advice ensures you make informed decisions and have a well-formulated plan, customised to your particular situation. Start planning today and ensure a brighter future for your loved ones.