Estate planning is one of the most important parts of ensuring your family will be looked after once you are no longer around.
Estate planning can be as simple as having a Will, it is also recommend to have an enduring power of attorney. More complex estate planning consist of setting up an estate plan which involves a comprehensive strategy to ensure that your estate is dealt with properly.
The benefits of good estate planning include:
- ensuring your assets are distributed according to your wishes
- ensuring assets outside of your estate that you control are dealt with in accordance with your wishes
- naming the people who will administer your estate
- naming guardians of underage children
- ensuring your estate plan is tax effective
- avoiding disputes between beneficiaries
- planning for possible incapacity
- helping your family make decisions during difficult times
- planning for business succession
Items that should be considered as part of your estate planning
- reviewing your personal assets
- business structures and documents, including trust, companies, partnerships etc.
- self-managed superannuation fund trust deeds, nominations and policies
- preparing binding death benefit nominations
- dealing with control of personal and non-personal assets
Difference between power of attorney and enduring power of attorney
A power of attorney is a legal document that appoints someone of your choice to lawfully act on your behalf. An enduring power of attorney continues to operate in circumstances where a person becomes legally incapacitated in relation to financial and/or health decisions.
Estate administration
Estate administration involves the management, collection and distribution of a deceased’s assets and liabilities following death. This may include applying for a grant of probate or letters of administration.
Establish your orders
A complete estate plan includes important legal directives.
- A trust might be appropriate. There are two main types of trusts that are usually used these are:
-
- revocable living trust, or,
- irrevocable trust.
- A medical care directive, also known as a living will, spells out your wishes for medical care if you become unable to make those decisions yourself.
- A durable financial power of attorney allows someone else to manage your financial affairs if you’re medically unable to do so.
- A limited power of attorney can be useful if the idea of turning over everything to someone else concerns you.
- Be careful about who has your power of attorney. They may literally have your financial well-being — and even your life — in their hands. You might want to assign the medical and financial representation to different people, as well as a backup for each in case your primary choice is unavailable when needed.
Plan to reassess
Life changes. So will your estate plan.
- Revisit your estate plan when your circumstances change, for better or for worse. This may include a marriage or divorce, the birth of a child, the loss of a loved one, getting a new job or being terminated.
- Revisit your estate plan periodically even if your circumstances don’t change. Although your situation may be the same, laws may have changed.
- It will take some effort to revise your plan. The need to revise means you’ve already avoided the biggest estate planning mistake: never drafting a plan at all.
Author
Natasa Briffa
