Estate planning is not just about making a will. It’s about deciding how you want to be looked after (both medically and financially) if you can’t make your own decisions later in life. It’s also about documenting how you want your assets to be distributed after you die.
Estate plans can be a complex area. So you may want to consider seeking professional advice to help guide you through the maze of legal, tax and financial matters arising from estate planning.
Here are some things to think about:
- Make a will – a solicitor can help you draw up a legally binding document that advises who should receive your assets when you die. If you don’t have a valid will, your estate will be distributed according to the law in your relevant state.
- Appoint an executor – this is the person who is responsible for making sure your assets are distributed according to your wishes, as well as paying bills, closing banks accounts and so on. Find out about the duties of an executor.
- Set up a power of attorney – An enduring power of attorney allows someone to make financial decisions on your behalf, even if you lose legal capacity. In some states, a power of attorney holder can also make lifestyle decisions. In others, you need a separate document (eg enduring guardianship). Ask your solicitor about the relevant powers of attorney documents in your state.
- Guardianship – if you haven’t legally appointed a person to manage your affairs through a power of attorney and it becomes necessary to do so, then a family member or friend can be given guardianship to make decisions on your behalf about your lifestyle (health, where you live etc). An administrator can also be appointed by a guardianship board to manage your financial affairs.
- Consider a family trust – this can help you manage your family assets or business with potential tax benefits. A family trust might also assist you with succession planning, wealth creation and protecting your assets, but make sure you’re aware of the tax implications. Trusts are very complex and you should get specialist advice to decide if they are appropriate for you. You should also discuss succession planning for any existing or new family trusts you may have with your solicitor.
- Nominate super beneficiaries – think about how you want your super to be distributed after you’re gone. Nominate your beneficiaries by completing a form from your super fund. Make sure you keep your nomination up-to-date. If you don’t, the super money may end up in the wrong hands.
- Insure yourself to protect your loved ones – insurance helps you and your family in the event of unforeseen events, such as serious illness or injury. Find out more about the different types of insurance, some of which are available through your super.
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Estate planning can be a complex area and there could be serious legal and tax implications if you don’t have it set up correctly. But while it can seem a bit daunting, it can also give you real peace of mind.