By Belinda Von Knoll
Estate planning ensures your lifetime's work is passed onto the people you choose. Yet many people either do not have a Will or have one which no longer reflects their current circumstances.
Many of us think estate planning is something you do later in life. However we need to recognise not all of us stay around long enough to get the letter from the Queen and it is important to put one in place early in adult life.
At a recent seminar held for our clients, the intricacies of estate planning were explored by a lawyer and a financial adviser. Both have shared their top five tips below:
Top five tips from the lawyer
- Have a Will – a large number of Australian's do not have Wills including those with significant assets and complicated lives (Robert Holmes a Court did not have one!)
- Pay for a Will - it costs less to pay for a properly executed and structured Will than to pay the legal costs when a poorly drafted Will is challenged.
- Avoid Post Office Wills – they keep litigation lawyers in Porsches!
- Be wary with codicils (a supplement modifying a will or revoking some provision of it) - no matter how small they are, they can cause problems if they are not implemented properly (see a lawyer about codicils. Don't write them yourself onto the bottom of the Will!)
- Understand what assets you own - not all assets form part of your Estate – superannuation, joint assets, companies and family trusts all need to be dealt with separately.
Top 5 tips from the financial adviser
- Have a non-lapsing/binding death nomination for your superannuation - be certain who will be paid your superannuation benefit. As at 30 June 2012 there was $1.4 trillion dollars in superannuation in Australia and yet many people do not know who their superannuation will go to on death.
- Understand who is a valid nomination for a superannuation death benefit - those who are valid include your spouse, your children, someone who is financially dependant on you and those in interdependency relationships.
- Understand the implications of a tax dependant versus a non-tax dependant on your superannuation nomination - speak to your adviser about exploring options to minimise the tax payable on a death benefit to a non-tax dependant. Examples of non-tax dependants are adult children, parents and grandchildren.
- Review your Will regularly as part of your overall planning – this is the only way you can be certain your wishes will be acted upon as your circumstances change over time. For example, marriage will revoke a Will, whilst divorce will, depending on the state in which you live, either revoke your Will or nullify certain clauses in the Will.
- Have in place an enduring Power of Attorney - as part of your overall estate planning make sure you have in place an enduring Power of Attorney as well as an enduring Power of Guardianship/Health Directive. The enduring Power of Attorney will enable you to have financial decisions made on your behalf if you are unable to do so by the person you choose. The enduring Power of Guardianship/Health Directive has the same purpose but for your non-financial affairs.
The purpose of estate planning is to put in place the best plan to effectively protect and maximise your assets both in life and beyond. Do you know what will happen to your assets when you pass away?
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