Estate Planning Essentials

An Estate Plan is a plan you have in place to manage and distribute your assets in the event of your death and incapacitation. It can also ensure that the right people are appointed in the event of your death and/or incapacitation to ensure your personal wishes are carried out.

The key documents to an effective Estate Plan include:

1. A Will

Your Will is document that directs how your Estate is to be distributed amongst your nominated beneficiaries. It can outline who you wish to look after your young children, any trusts you wish to establish and if you would like to donate to charities. It can even have instructions about your funeral.

If you die without a valid Will, the law of intestacy decides who gets your assets. These rules apply to everyone and do not take into account your wishes or situation.

Most people believe that their Will covers all their assets, this is not that case. A Will does not take into account your superannuation or super- based insurance benefits. This is why an estate plan is important.

2. Testamentary Trust

A Testamentary Trust is a Trust created in accordancewith your Will, and may be used to distribute your Estate to beneficiaries in a more tax effective manner. It may reduce the likelihood of a successful challenge to your Will and it provides possible protection of your beneficiaries in the event of a divorce or any other legal claims.

3. Power of Attorney

There are two main types of Powers of Attorney.

A General Power of Attorney is a legal document that allows you to appoint someone to make financial or legal decisions on your behalf, in your absence.

Enduring Powers of Attorney are legal documents that allow you to appoint someone who can make your decisions for you in the event that you become incapacitated and/or are unable to make decisions for yourself. If you become incapacitated without a Power of Attorney the decisions about your financial and medical management are made according to the law.

Please note that different states have different laws when it comes to Power of Attorney and you will need to consider this when deciding whom to appoint.

4. Your Superannuation

Your Superannuation is an asset that is excluded from your Will. Your superannuation benefit is distributed in accordance with the Trust Deed by the Superannuation Trustee, which generally offers you the option of nominating a beneficiary to receive your superannuation benefit in the event of death.

In order to communicate your nominated beneficiaries to the Superannuation Trustee you must provide 'A Binding Death Nomination' or 'Non-Binding Death Nomination' form. The nomination is able to be amended, or cancelled at any time via written declaration addressed to the Superannuation Trustee.

If you die without having a nominated beneficiary listed on your Superannuation account, depending on the product, the trustee will either pay your death benefit to your Estate or it may use its discretion to determine the beneficiaries.

You will need to consult your solicitor at some stage to review your Estate Plan, however there are some aspects of Estate Planning that may need the attention of a professional adviser prior to visiting the solicitor.

For more information please contact us.