Estate Planning Strategy Advice

Preparing for your family’s future

It may be awkward, but it’s important to decide who you want to inherit your assets when you die. Find out how you can give instructions to your family about your legal and medical preferences should you fall ill or lose the capacity to make those decisions yourself.

Estate plans

An estate plan establishes directions on how you want your assets distributed after your death, including how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.

You must be over 18 and mentally competent to form your estate plan. Key items might include:

  • Will
  • Superannuation death benefit nominations
  • Testamentary trust
  • Powers of attorney
  • Power of guardianship
  • Anticipatory direction

You should ask a legal professional for advice on your estate plan. An estate plan ideally should minimise the tax paid by your heirs, and help avoid any family disagreements.

Wills

A will takes effect when you die. It can cover things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you’d like donated to charities and even instructions about your funeral.

Your will can be written and updated by private trustees and solicitors, who usually charge a fee. Some Public Trustees will not charge to prepare or update your will, but only if they act as the executor of your will. Other Public Trustees may only exempt you from charges if you are a pensioner or aged over 60.

It’s estimated that nearly half of all Australians die without a will, or ‘intestate’. Don’t let this happen to you. Make a will today.

You can also buy a will kit from Australia Post, but it’s better to ask a solicitor.

Review your will as your legal rights change – if you marry, divorce or separate; have children or grandchildren; if your spouse or beneficiaries die; or if you have a significant change in financial circumstances.

If you die intestate or your will is invalid, an administrator appointed by the court pays your bills and taxes from your assets, then distributes the remainder, based on a pre-determined formula, which may not be how you intended your assets to be distributed.

If you die intestate and don’t have any living relatives, your estate is paid to the state government.

Testamentary Trusts

A testamentary trust is a trust set out in a will that only takes effect when the person who has created the will, dies and is usually set up to protect assets.

Here are some reasons why you would create a testamentary trust:

  • The beneficiaries are minors (under 18 – 21 years old)
  • The beneficiaries have diminished mental capacity
  • You do not trust the beneficiary to use their inheritance wisely
  • You do not want family assets split as part of a divorce settlement
  • You do not want family assets to become part of bankruptcy proceedings

A trust will be administered by a trustee who is usually appointed in the will.

A trustee must look after the assets for the benefit of the beneficiaries until the trust expires.

The expiry date of a trust will be a specific date such as when a minor reaches a certain age or a beneficiary achieves a certain goal or milestone, like getting married or attaining a specific qualification.

Powers Of Attorney

Appointing someone as your power of attorney gives them the legal authority to look after your affairs on your behalf.

Powers of attorney depend on which state or territory you are in: they can refer to just financial powers.

Generally speaking, there are different types of power of attorney:

  • A general power of attorney is where you appoint someone to make financial and legal decisions for you, usually for a specified period of time, for example if you’re overseas and unable to manage your legal affairs at home. This person’s appointment becomes invalid if you lose the capacity to make decisions for yourself.
  • An enduring power of attorney is where you appoint a person to make financial and legal decisions for you if you lose the capacity to make your own decisions.
  • A medical power of attorney can make only medical decisions on your behalf if you become unable to do so yourself.

You can prepare a few other documents to help your legal appointees and family as you grow older, including:

  • An enduring power of guardianship that gives a person the right to choose where you live and make decisions about your medical care and other lifestyle choices, if you lose the capacity to make your own decisions.
  • An anticipatory direction records your wishes about medical treatment in the future, in case you become unable to express those wishes yourself.
  • An advance healthcare directive (or living will) documents how you would like your body to be dealt with if you lose the capacity to make those decisions yourself.

Choosing your powers of attorney

Nominate people that you know are trustworthy, if possible financially astute, and likely to be around when you need them.

Your Legal & Financial Housekeeping

Once your paperwork is in order, it will help your executor and family if you list the legal documents you have and where they are kept.

Here is a list of key documents to keep:

  • Birth certificate
  • Marriage certificate
  • Will
  • Enduring power of attorney
  • Advance healthcare directive (also called a living will)
  • Personal insurance policies
  • House deeds
  • Home and contents insurance
  • Deeds and insurance policies for any other real estate you own
  • Bank account details
  • Superannuation papers
  • Investment documents (securities, share certificates, bonds)
  • Medicare card
  • Medical insurance details
  • Pensioner concession card
  • Any pre-payments of funeral investments

A good will and estate plan can help with your wishes being carried out after you die, or if you lose the ability to make your own decisions.

View this video to find out more about the areas your Financial Planner will help you to consider when establishing your estate plan.