We may not like to think about it but when it comes to our death, it pays to plan ahead. The emotional impact your death can have on your family and friends is tough enough let alone the addition of financial stress due to ill-planning or no planning at all.
There are many considerations to ensure your family has adequate protection and your estate is properly distributed and managed.
Estate planning can often be a complex area to address, so consultation with your professional advisers can help ensure you have the right arrangements in place.
We explore below some areas you may need to discuss when you seek professional advice.
Will – When most people think about Estate Planning arrangements, they just think about their Will. When you prepare a Will, carefully think about your wishes and how you’d like to structure the distribution of your assets to your preferred beneficiaries. Structuring a Will can have implications on relationships and the financial circumstances of your beneficiaries and can even at times cause friction amongst surviving family and friends. Getting quality estate planning advice can help you to structure the distribution of your assets in a fair and equitable way. You can also check out our Will Checklist here.
Executor – A very important part of creating a Will is the appointment of the Executor of your Will. This person will be responsible for carrying out your wishes as documented in your Will and is given many responsibilities and duties. Many people decide to appoint a family member as Executor however sometimes it is better to appoint someone who is removed from the emotional grief. Alternatively, you could consider nominating a professional adviser, business associate or trusted friend. Which way is preferable depends on your personal situation and preferences.
Statement of Wishes – A statement of wishes isn’t compulsory but can be helpful as it outlines why you have structured your Will in a particular way and your intentions for making specific gifts. It’s also an opportunity for you to outline your preferred funeral arrangements. This alone can be beneficial in providing your surviving family and friends with guidance on your wishes, helping to ease the burden on them at this time. Often you can update your Statement of Wishes without the need to update your Will.
Medical Power of Attorney / Enduring Guardianship – Appointment as a Medical Power of Attorney is a big responsibility for the person that you nominate as they will need to make some important medical decisions for you in the event that you are unable to make them yourself. Once you’ve appointed an Attorney, you need to discuss your wishes in the event of different medical situations occurring. You should also tell your family of your appointed Attorney.
Financial Power of Attorney – Appointing a Financial Power of Attorney will provide someone with the ability to take control of your financial situation in the event of your incapacity. They can arrange to pay bills or make other important financial decisions on your behalf. The person that you appoint needs to be trustworthy and should be familiar with your personal financial situation. The more organised you are with your finances, the easier it will be for your Attorney should they need to take over your financial management.
Insurances – There are a range of insurances that can help lessen the financial impact of your death on your family and loved ones. Whilst leaving a sum of money via a Life insurance policy is a small consolation, if you have ongoing debt and financial responsibilities it can at least provide family with a way to extinguish debts and reduce stress. Other insurances like Trauma insurance and Total & Permanent Disability (TPD) insurance provide financial support to you and your family in the event that you are sick or injured and survive for a period of time. These lump sum payments will provide you with access to funds to reduce debt, pay medical and rehabilitation expenses and in some cases replace your income. If you have insurances in place, you should communicate with your Executor and family, so they are aware of the policies in the event you need to claim on them. Our Insurance Planning learning module provides more information on the various types of insurances available.
Funeral insurance plan – For people wishing to ensure family and friends have access to cash to pay for funeral expenses then a Funeral Insurance plan may be an appropriate consideration. Typically, these policies provide a limited sum insured (generally $5,000 to around $20,000) payable within 24 hours of receiving a claim form notifying of your death.
Superannuation – Not every asset you own will form part of your will. One such asset is your superannuation. Ensuring the proceeds of your superannuation go to the right person/s on your death is a relatively simple, yet often overlooked process. Arrangements such as a binding or discretionary beneficiary nomination for your superannuation can ensure your superannuation is paid out as per your wishes.
Business Arrangements and Succession Planning – If you run a business, then it’s important to have a plan outlining what you would like to happen in the business in the event of your accident, illness or death. Documents such as a buy/sell agreement, which are often funded by an insurance policy, can help provide protection to your family and remaining business owner/s. It is advisable to have conversations with your family and business partners as to your wishes and expectations and to seek appropriate financial and legal advice to implement Business insurance and funding arrangements to support your wishes.
If you are a key person in your business, then you might also wish to consider training someone else in the role. Doing so will help the business keep afloat in the event that you are unable to run it temporarily or permanently.
As you can see, there are many elements to an effective estate plan. Given its complexity, it pays to seek professional advice in clarifying and implementing your estate plan and when appropriate assisting your family to manage your affairs.
We can assist you with your Estate Planning. Please contact us on 02 6921 2058 or
email us at financialservices@easdowns.com.au to make an appointment today.
Sources: easdowns.financialknowledgecentre.com.au
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