Estate planning – providing for your beneficiaries and providing you with peace of mind
Estate planning is much more detailed than simply making a Will. It involves organising your estate to ensure that your wealth is passed into the right hands, in the most financially-efficient and tax-effective ways.
What do you need to consider when assessing your estate planning needs?
- Do you have an effective, current Will?
- Do you have Enduring Powers of Attorney and Guardianship?
- Do you have beneficiaries with special needs?
- Will there be enough money to satisfy your family’s needs in the future?
- Have you considered any tax or other implications of your estate planning arrangements?
- Do you believe you may require the creation of more complex trusts within this will?
These are just some of the issues Australians are faced with every day when considering their estate planning needs. If you answered yes to any of these questions, you should contact your financial planner for advice on developing your own estate plan that works for you and your family.
Adam and Genevieve were married and have two young children. With all the expenses of having young children and the recent purchase of a large, four bedroom home, Genevieve planned to restart part-time work.
Adam was killed unexpectedly while on a fishing trip. The future they had planned for fell to pieces in an instant. The only cover Adam had apart from insurance for their mortgage was a small savings account his parents had set up for him when he was younger. This, however, was only a few thousand dollars – and was definitely not enough for Genevieve to raise both their young children.
An event like this can leave a family in a desperate situation. Although Adam had a Will, a lack of planning had seen his family left with no money for the future.
An estate planning review with a Certified Financial Planner would have provided Adam and Genevieve with a full analysis of the type of risk cover they would need to ensure Genevieve and the children would be financially stable.
Estate Planning Issues
When thinking about financial planning issues, it is natural that the assumed time frame is one’s own lifetime. However, building up your financial resources is only one aspect, and the transfer or allocation of these resources after your death is equally important. Looked at in that sense, estate planning is part of the financial planning process. We believe that in your case you should also give consideration to the effects of tax upon the value that your beneficiaries are likely to receive.
A will is the first step in ensuring the distribution of your estate is actioned in accordance with your wishes. Without a will, upon your death the law determines how, and to whom, your estate is distributed.
Your financial situation should be looked at in its totality. We recommend that you look at the way in which we have set out your current financial position, and consider the way that the law allows the following assets to be allocated upon your death, irrespective of the terms of your will.
|If your assets are in:||Then…||Or…|
|1. Superannuation||According to your binding nomination if it is valid at your date of death; or for some pensions such as an allocated pension, to the surviving reversionary pensioner if you have nominated one.||Otherwise the account value is allocated as the Trustee of the fund decides, from amongst your spouse and dependants (which can include a wife or children from a former marriage or de facto relationship)|
|2. Assets held in joint names||To the other person who holds the ownership of the asset.||Otherwise if that person died before, or with you, then according to the way that you have left your estate in your will.|
|3. Assets in your name||According to the terms of your will||Otherwise if you don’t have a will, according to how the law determines your estate should pass on intestacy|
|4. Insurance||To the person who is the owner of the policy||Or the nominated beneficiary.|
|5. Partnership Assets||These are the property of the partnership… you only have an interest in the partnership itself|
|6. Assets Owned by a Private Company||The assets belong to the company|
|7. Shares in a private company||The shares will only be able to be disposed of according to the limitations within the company’s constitution|
|8. Units in a Trust||Can only be disposed of according to the terms of the trust|