MAKE SURE YOUR ASSETS ARE DISTRIBUTED AS YOU WANT THEM TO BE
Estate Planning is far more than just drawing up your Will. A good Estate Plan will help protect your assets, inform your loved ones on the care you want if you’re no longer able to care or make decisions for yourself and ensure your assets are distributed how you want them.
Many people think they don’t have enough of an ‘estate’ to warrant creating an Estate Plan but this is not true, if you are working you have superannuation, if you own anything – a car, a house, some jewellery – you have an estate.
It could be the case that you have a lot to leave your loved ones, a home, an investment portfolio, expensive art and so on. Or perhaps, you don’t have a lot but you want to make sure your favourite niece gets your special edition Harry Potter collection (my uncle has decided I will get his piano accordion – a good reminder to make sure you’re giving your family something they actually want!). An Estate Plan ensures all of your assets, no matter how large or small are distributed the way you want them.
An Estate Plan can also help with blended families and the more complex family structures that have become the norm now. By creating an Estate Plan, you have clearly identified who you want to receive your assets and how, ensuring that disagreements between your loved ones are minimised. Without a plan, your loved ones could argue over your assets and potentially move to legal action.
It’s especially important to have an Estate Plan if you have anyone financially dependent on you – who will care for them if you can’t and how will this be funded?
There is also potential to save tax on behalf of your loved ones, there are no ‘death taxes’ here in Australia. Your loved ones may receive money and assets without paying tax however, if they were to then sell the asset then Capital Gains Tax may apply. Tax may also apply on receiving superannuation death benefits.
WHAT ABOUT YOU?
Estate planning doesn’t just cover your assets, it also allows you to make decisions now about what happens if you can no longer care for yourself. A Power of Attorney (Enduring Power of Attorney) can make financial decisions on your behalf, a Guardian (Enduring Power of Guardianship) can make personal, lifestyle and healthcare decisions for you. These documents can be prepared now but only come into force if you decide you can no longer make these decisions for yourself, or you are legally declared to be unable to make those decisions.
Preparing now for what may happen can save your family a lot of distress. Imagine if you had to go through the process of having a loved one declared legally incapable before being able to make decisions that would better their life?
Going one step further, you could also compete an Advanced Care Plan and an Advanced Health Directive.
The Advanced Health Directive lets you document how you want to be medically treated in certain circumstances, for example you may not want to be resuscitated if you have a terminal illness or you may want everything done in order to preserve your life. By detailing your wishes, your family and doctors won’t have to make these decisions during what will most certainly be a highly emotional time.
The Advanced Care Plan lists some of the decisions above, but also encompasses your spiritual and emotional needs and wants rather than just your medical needs. You can make decisions such as whether you want to spend your last days at home or in a hospital, whether you want a representative from your religion with you and so on. This plan also covers items that may not be in your Will such as who you want to care for your pets and reiterating your wishes to be an organ donor.
CONCLUSION
Making sure you have the right Estate Plan in place is essential to ensuring you protect your assets, your family and your legacy. It is not a set and forget document, it should be reviewed regularly and updated when you have major life events such as moving home, getting married or new children or grandchildren come into the family.
It is very important that you understand that the information above is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. It is also worth noting that the Australian financial and taxation system is ever changing, and the information above may no longer be relevant. Again, we suggest seeking professional advice from a financial adviser before proceeding.
