Will & estate planning

Planning for the future shouldn’t just cover how your money is managed today, but also afterwards, when the wealth you have accumulated is left to your estate.

Estate planning plays an important role in wealth management. It not only involves documenting how you want your assets to be distributed after you pass away, but it also addresses how you plan to look after yourself, both medically and financially, should you be in a situation where you are unable to make these decisions for yourself.

Ultimately, a complete estate plan gives you – and your family – peace of mind and the ability to avoid misunderstandings and potential tensions.

Estate planning can be a complex area with important tax and legal implications, and taking a do-it-yourself approach can be risky. That’s why it makes sense to speak to your FinChoice financial adviser, who after getting to know your situation can work with the right people to ensure you have an appropriate estate plan that addresses your wishes.

What do I need to consider?

Your financial situation, how your assets are structured (e.g. trusts and companies) and your family situation (e.g. nuclear, single-parent or blended family) are some of the more common factors that will determine your estate planning requirements.

Depending on your situation you may have simple estate planning needs or they may be more advanced, however either way, you still need to think about what assets you own, and who you would like to have inherit them if anything happened to you.

Estate plans shouldn’t be “set and forget”

Our lives don’t stand still for long, and any major changes in your life should be a cue to speak with your financial adviser to update your estate plans. Common significant events that will require a review of your estate plan would be marriage, separation, divorce, and the arrival of children. Other significant events that might trigger a review would be when you buy or sell a major asset.

As part of an ongoing advice relationship, your adviser can help you identify when the changes in your circumstances mean that it would be appropriate to review and update your estate plan.

The main takeaway is that your FinChoice financial adviser can guide you across every life stage to help you develop, and maintain, an estate plan that continues to remain in line with your wishes. This is not limited to personal estate planning and also extends to business estate planning.

Wills, power of attorney, testamentary trusts, child guardianship

Advanced estate planning encompasses a range of aspects – and there are benefits to be had now from reviewing your estate plans, as well as significant upside in the future when you take steps now to help avoid tension and misunderstanding at what will already be a difficult time for your loved ones.

Key aspects involved in estate planning

Your will forms the centrepiece of your estate plan. This important document states how you want to transfer your assets – your possessions and property - after your death.

If you pass away without a will, known as dying intestate, your estate will be distributed according to a state government-determined formula. Chances are, this formula won’t reflect your wishes, so it is important to speak with your FinChoice financial adviser to arrange for a legal expert to prepare a formally drafted will of your own deciding.

Broadly speaking, your will should:

  • Provide directions on how your estate should be distributed,
  • Nominate guardians for children under 18 or any other dependents, and
  • Make provisions for the people who depend on you financially

Your FinChoice financial adviser can help you arrange a professionally prepared will. This not only gives you peace of mind that your wishes will be followed, it can prevent any potential issues later on from people trying to contest your wishes.

Your executor is responsible for managing and distributing your estate in line with your will. Some people choose an adult child as their executor, however this can put an additional burden on loved ones at a difficult time.

You can also nominate an independent party such as your solicitor to be your executor. The fees for this service are usually paid from your estate.

A Power of attorney lets you nominate a person (your attorney) to act on your behalf when you can’t do so yourself.

It can be useful if you are heading overseas for an extended period, and you need a trusted person to manage your money while you’re away.

As we age however, a power of attorney becomes critical should you no longer have the capacity to manage your financial affairs yourself.

Your FinChoice financial adviser can explain how establishing a power of attorney is appropriate for your circumstances.

A testamentary trust is established as part of your will. It allows the trust to hold assets from your estate for the benefit of other people – the trust beneficiaries. In this way, a testamentary trust can be used to provide for the financial wellbeing of children or family members with special needs, for an extended time after you have passed away.

As parents, we never want to think that we won’t be around for our children. But by nominating a legal guardian in your will, you at least have control of who cares for and raises your kids if you pass away.

Your super cannot normally be bequeathed through your will. You will need to complete a binding nomination to let the trustees of your super fund know who you would like to inherit your funds.

The decision about who inherits your super does call for professional advice. There can be tax implications for beneficiaries who are not dependent on you. Your FinChoice financial adviser can provide you the information you need to help you make the right decisions.