Estate planning is about taking control of your future and looking after yourself and your loved ones. It’s about protecting what you have, and planning for the inevitable, and the unforeseen. Many people put it off, thinking it’s only for the wealthy or elderly, but estate planning is important for every adult, no matter what their age or financial situation.
While estate planning can be complex, there are steps you can take right now to start getting your affairs in order.
1. Prepare for the Inevitable: Plan Your Will
A valid Will gives your family certainty when you die. It provides clear instructions for your assets and ensures your wishes are respected. Without a Will, your estate will be distributed according to intestacy laws, which might not align with your wishes.
What to do:
- List your assets and liabilities: While your assets may change over the years, having a clear (current) inventory makes it easier to plan how they will be distributed and helps your executor manage your estate. Think about your:
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- Family home and other real estate
- Personal property (vehicles, jewellery, artwork)
- Bank accounts (savings, term deposits)
- Investments (shares, stocks, bonds)
- Superannuation (retirement funds)
- Insurance policies (life insurance)
- Business interests
- Consider how assets are held: The type of assets and how they are owned can impact your estate plans. For example, a property held as joint tenants automatically passes to the surviving owner on your death and is not generally covered by your Will. Similarly, there are special laws regarding the beneficiaries of your superannuation entitlements.
- Choose your beneficiaries: Think about those who should receive your assets – family members, friends, or charities. If you’re part of a blended family, you may need to consider how your current partner, your children, and any stepchildren fit into the picture. Protecting vulnerable or at-risk beneficiaries should also be considered. You may want to leave specific items, certain percentages, or a combination of both, and nominate alternative beneficiaries in case your primary choice cannot inherit.
- Choose your executor: Executors have many responsibilities, including identifying and protecting your assets, collecting or paying debts, obtaining probate and distributing your assets. It is common to appoint more than one executor or a substitute executor in case the original appointed executor is unwilling or otherwise unable to take on the role. Your executor/s should be:
- willing to accept the role
- able to manage the estate in terms of their health and capacity
- capable of managing the estate in terms of their time and experience
- able to act impartially, particularly if disputes could arise
2. Guard Against Incapacity: Consider an Enduring Power of Attorney
An Enduring Power of Attorney (EPA) is a document appointing a trusted person (attorney) to manage certain matters if you lose the capacity to do so yourself. This can prevent potential chaos and stress for your family.
What to do:
- Choose wisely: Appoint someone you trust implicitly to manage your affairs if you become incapacitated due to illness or injury.
- Understand the role: Different jurisdictions have different forms and rules about what an EPA covers, for example, your attorney may be authorised to pay bills, manage investments, and deal with property matters on your behalf. It’s important to understand the options available so you can make an informed decision.
- Do it early: You must have the mental capacity to appoint an EPA. If you lose capacity without one in place, a court may need to appoint someone, which can be a lengthy and costly process.
3. Support Your Lifestyle Wishes: Enduring Guardians
Guardianship documents allow you to appoint someone you trust to make decisions for you if you lose capacity – they help to ensure your preferences are respected even if you can’t voice them. Guardians typically make decisions about your lifestyle, health, and accommodation needs.
What to do:
- Select a guardian: Choose a person who understands your values and wishes regarding your healthcare and personal care. This might include decisions about medical treatment, where you live, and what services you receive.
- Discuss your wishes: Have open conversations with your chosen guardian about your preferences, especially regarding medical treatments you would or would not want.
- Know your state’s rules: The requirements and documentation for appointing a guardian vary between Australian states and territories.
4. Review Your Superannuation
Many people assume their superannuation automatically forms part of their estate and will be distributed according to their Will. This is not necessarily the case. Superannuation is held in a trust, and how it’s paid out depends on a binding death benefit nomination or the super fund’s discretion.
A valid binding death benefit nomination is crucial for ensuring your superannuation benefits are paid directly to your chosen recipients, avoiding potential delays, disputes, or even the funds going to someone you didn’t intend.
What to do:
- Check your fund: Contact your superannuation fund to see if you have an existing beneficiary nomination and what type it is (e.g., binding or non-binding).
- Make a binding nomination: Make a ‘binding death benefit nomination’ to instruct your super fund regarding the beneficiary of your superannuation entitlements.
5. Make an Appointment with an Estate Planning Lawyer
Now, it’s time to put your plans into action and get professional advice from an experienced estate lawyer to formalise your wishes with legally binding documents.
Here’s why professional advice is so important:
- Validity of documents: There are strict requirements involved in the preparation, signing, and witnessing of legal documents. A lawyer will ensure that your estate planning documents are correctly drafted and signed/witnessed to ensure their validity.
- Comprehensive advice: Your lawyer will consider your personal, family, and financial circumstances to help you achieve your estate planning goals. They’ll often raise matters that you may not have considered. They can also work with your financial professional to ensure a comprehensive approach to your estate planning.
- Mitigating risk and minimising disputes: Experienced lawyers usually consider potential issues that could arise, such as disputes or challenges to your Will or estate, and can provide advice to help guard against these issues.
Completing these steps today can make a big start towards an estate plan that helps protect you and your family and provides peace of mind.
This is general information only. For tailored advice and to ensure all your documents are legally sound, we recommend consulting with an experienced lawyer. For more information, help, or advice, please call (02) 4382 2200 or email [email protected].