Estate Planning Essentials Australia

Estate planning is crucial for ensuring that your assets are distributed according to your wishes and that your loved ones are taken care of after you pass away.

For many people, talking about estate planning is complicated. While no one wants to face their mortality, having your final affairs in order will give you peace of mind and ease the burden on those left behind. Ensuring that your estate is in excellent condition is critical. If you are retired, getting close to retirement, or are looking to take care of your family while preparing for the unexpected, estate planning should be near the top of your to-do list.

 

What is Estate Planning in Australia?

Estate planning is developing and organising the allocation of assets before an individual’s passing. A vital goal of an estate plan is safeguarding as much of an individual’s wealth as possible. This is to give the individual flexibility during their lifetime and leave as much as possible for the intended recipients.

You may have heard that estate planning is complex. It can be challenging, especially if there are numerous assets to distribute. The more you understand estate planning, the simpler the task becomes. Relying on a financial planning professional is a smart move that can ensure your wishes are honoured.

 

Where Do I Start with Estate Planning?

When you realise that estate planning involves more than drawing up a will, the process can seem daunting. Break down your tasks into these manageable steps to avoid feeling overwhelmed.

  • Inventory Your Assets – You will want to list your physical assets, financial holdings, and intellectual property. Avoid excess stress by focusing on the list and not pondering who will get what and why. That task will come later. Remember, your fund’s trustee manages your Superannuation fund, so it does not have to be included in this list.
  • Your Debts and Liabilities – Make a list of debts, loans, or other liabilities so your family knows what must be paid.
  • Documents for Future Care – If you have specific ideas regarding your future care, speak with a lawyer about drawing up an advance health care directive. You should also consider the power of attorney and power of guardianship, depending on your needs and situation.
  • Consider Your Family’s Needs – You will want to ensure your family will have a comfortable life after you pass. Look at each person’s needs to help direct your plans. For example, do you have underage children who will need a legal guardian? Is one of your family members in declining health and need of special care? You will need to make plans for their future.
  • Choose Your Beneficiaries – For many people, these will be family members or close friends. However, you get the final word on who will get some of your assets. This choice is yours, so if you want to give a gift to your favourite charity, a helpful neighbour, or earmark money for your pet’s future care, feel free to do this.
  • Legacy Contact – In the age of social media, appointing someone as a legacy contact is common. This person will have the authority to access and shut down your social media accounts.
  • Decide How You Want Your Estate Divided – Determine the amount of money you want your beneficiaries to receive. Also, think about special objects. Did your nephew love to work on your vintage auto with you? Your granddaughter may have marvelled at your antique teapot collection. You will want to think about gifting such objects to those who appreciate them.
  • Update Your Plans – Make a point of going over your decisions every few years to ensure the plans are still relevant. Deaths, births, interpersonal conflicts, marriages, and divorces can all impact the terms of your estate plan.
  • Store Your Documents Properly – The easiest way to ensure your plans are enacted is to make them accessible when needed. Your attorney can advise who should have a copy of your estate plan and keep one themselves.

A will is a legal document that outlines how you want your assets to be distributed after your death.

 

What is a Will?

A will is a legal document explaining your wishes and how you would like your assets divided after your death. Typically, your will contains the following information:

  • Division of Your Assets
  • Guardianship of Your Children if They are Underage.
  • Trusts You Want Set Up
  • The Amount of Money Given to Charities
  • Plans for Your Funeral

 

How Do I Make a Will?

Using your estate plan streamlines writing your will as a significant portion of the information is compiled. The will writing process consists of the following:

  • Title the document as your “Last Will and Testament”
  • Date the will and mention your full name, occupation, and that you are of ‘sound mind’ at the time of writing
  • List the full name of your executors, their address, and their relationship to you
  • List the full name of your primary beneficiary, their address and relationship to you
  • List non-monetary gifts and the beneficiaries
  • List monetary amounts and the beneficiaries
  • List any charitable gifts and the organisation receiving them
  • Add the full names of your two witnesses, their addresses, and occupations
  • Sign your will and initial every page in front of your witnesses

When Should I Update My Will?

While reviewing your will every few years is recommended, there are several instances where updating your will is necessary. These events include:

  • Adding children, stepchildren, or grandchildren to your family or taking legal guardianship of another
  • Relationship changes such as marriage, divorce, or separation as well as beginning or ending a de facto relationship.
  • A loved one’s passing
  • The sale or purchase of property
  • Opening or closing a business
  • A serious illness
  • Receiving an Inheritance
  • Significant changes in your circumstances financially

 

How Does My Super Affect My Will?

You can nominate anyone you like as a beneficiary to your Super using a Binding Nomination. The beneficiary will receive your Super balance upon your death.

You also have the option to leave your Super to your legal representative. If you choose this option, the balance will be given according to the directions in your will.

 

Can My Will Be Found Invalid?

Your will can be declared invalid under specific circumstances. For example:

  • You have named no executor
  • Your executor has died or otherwise is unable or unwilling to act
  • You had no witnesses when you signed
  • Your witnesses are beneficiaries of your will
  • It was not clear that you revoked any previous wills.
  • You were not ‘of sound mind’ when you wrote the will
  • You failed to update your will after getting married

 

Special Appointments

While not every person needs to create these legal designations, they are typical for many Australians who are planning their estates.

  • Power of Attorney

    Power of Attorney (POA) is a legally binding document that gives another person the authority to act on your behalf. The scope is limited, and someone with a POA can make decisions for you, which include legal, financial, business, and personal affairs.

    You can name anyone to serve as your POA, and it is common for some people to give their legal or financial advisors Power of Attorney.

  • Enduring Power of Attorney in Western Australia

    In Western Australia, you can grant what is known as Enduring Power of Attorney to the person of your choice. It differs from Power of Attorney in that it will continue even after you lose legal capacity. A regular POA is in force while you have legal capacity. If you are no longer deemed able to make sound decisions (lose legal capacity), the Power of Attorney is no longer operational.

    You should note that you can choose to have Enduring Power of Attorney begin right away, or you have the option of having it start if you should lose legal capacity as determined by the State Administrative Tribunal

    Additionally, if you choose to allow the Enduring Power of Attorney to begin right away, this does NOT mean you have forfeited your rights to make your own decisions. You can manage your financial affairs unless you lose your legal capacity. At that time, the person designated with Enduring Power of Attorney will begin to manage your finances.

  • Medical Power of Attorney

    Giving someone Medical Power of Attorney differs from POA and Enduring Power of Attorney because it allows your assigned person to make decisions that determine where you live, medical treatment, and refusing medical treatment. This decision-making is not in effect until you are deemed to have lost your legal capacity by the State Administrative Tribunal.

    Given the scope of Medical Power of Attorney, you must make your choice carefully. A non-family member is often chosen because they can be more objective regarding certain decisions.

    Estate planning is vital to protect your family and your assets. It also can give you a significant sense of relief once everything is in place. For many, it is also a challenging task they prefer not to do.

If you are perplexed with estate planning or prefer to let an expert take the reins, contact the financial professionals at Grace Life and Wealth. We are experienced in all aspects of estate planning and can assist you in making your wishes known in a legally binding way.

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