Personal Financial Advice for your Estate Plan
What is Estate Planning?
An estate plan is a critical component of your overall financial plan, for your family’s financial future is one of the most important steps you can take to ensure your spouse, children, and grandchildren are financially secure and protected in the future. No matter what your age or financial position, it is never too early to create an intergenerational financial plan to ensure security and stability for your loved ones in the future.
Through estate planning, you can safeguard your wealth and ensure that your intended beneficiaries are well protected in case you pass away rather than hinder their future. Generally, in its simplest form, estate planning can be broken down into three steps:
- Understand your assets and your liabilities. For example, superannuation, investments, bank accounts, life insurance policy, a home loan, personal loans, and credit cards.
- Identify risks. For example, the potential for divorce, or early death.
- Creating a plan that is tailored to your needs, family members, personal circumstances, and financial structure
Making your Estate Plan
We spend our whole lives planning for our future and looking ahead. Sometimes, we forget to think about what we leave behind. Yet, according to a recent survey, a worrying 70% of Australians have not written a Will, furthermore, ASIC has found that almost half of all Australians die without a Will.
What important documents should be a part of your estate plan?
- Your Will and Last Testament
- Testamentary Trust
- Superannuation Binding Nominations
- Power of Attorney and Enduring Guardianship
- Advanced Healthcare Directive
If you begin with a well-defined estate plan, you can be confident that your objectives have been adequately recorded. This way, you can ensure that your assets are safe, protected, and are received by whom you wish them for in the event of life-threatening cases and deaths. Additionally, this can help to minimise family conflicts, which can be costly if legal assistance is required.
Updating your Will
An effective estate plan needs to have enough flexibility to adapt to the changes life throws at you while still providing for your loved ones and yourself.
It’s a common misconception that estate planning only has to be done once. However, the NSW Government Trustee and Guardian recommend that you review your Will every 3-5 years or whenever there’s a significant event or change in your life.
When should I update my Will?
Some of the key life stages where you may wish to review/update your Will include:
- Having Children
- Death of a Loved One
- Major Financial Changes
- Major Investment Changes
- Major Changes in Your Business
Super and your Will
Any money you have in your super fund or from life insurance owned by your super fund is not included in your Will. These will need to be planned for separately as part of your estate planning.
A binding death benefit nomination (BDBN) is a legal document whereby you nominate a beneficiary to inherit your super fund balance and associated life insurance benefits upon your death.
Once notified of your passing, your super fund trustee will arrange for your superannuation fund (or superannuation income stream) and life insurance to be released to your beneficiary in accordance with your nomination.
There may also be an opportunity to manage or avoid death taxes that often apply to your superannuation. You can discuss your superannuation plan and tax minimisation strategies with an experienced financial adviser.
Do you need help with your Estate Plan?
There isn’t one ‘best way’ to leave an inheritance. Everybody is different and has a different family structure and assets. So, it makes sense that everyone’s plan will be individual too. Without proper planning, you may deprive your family of much-needed investments or be forced to pay higher taxes.
Working on your estate plan with an experienced financial adviser will help ensure that you have peace of mind, no matter what happens thanks to professional advice. We ask the right questions to understand your family and your goals, so you can still look after your family when you are gone.
A Financial Adviser will work in conjunction with the estate planning lawyer to help guide you and your family through the estate planning process, complete all necessary documentation, and make the right decisions with your financial and personal assets.
Upon your death, your Financial Adviser can then work with your solicitor to dissolve your investment portfolio and then distribute your financial assets and personal insurance claims in adherence to the instructions outlined in your estate plan, ensuring peace of mind during your family’s time of grief.
With their extensive specialist knowledge, a Coastal Advice Group Financial Adviser can help you with all your Estate Planning needs. We have offices located in Newcastle, the Central Coast, Sydney, Port Macquarie, and Byron Bay.
Estate Planning FAQs
Every good estate plan starts with a Last Will and Testament.
A Will is a legal document that sets out who will receive your property and possessions when you die. In NSW, it is usually in your best interest for a solicitor, or the NSW Trustee and Guardian, or a trustee company to do your will for you.
To be valid a Will:
- must be in writing;
- must be signed; and
- your signature must be witnessed by two other people who also need to sign the Will.
With a Will, you may specify who will get your assets, including cash, investments, real estate, vehicles, jewellery, art, and other valuables. You may also utilise your Will to inform your loved ones about your funeral, burial, or cremation preferences. Without a Will, legal challenges from unhappy or estranged family members and other interested parties are common.
You must choose an executor to guarantee that your instructions are carried out, and your estate is distributed accordingly. An executor’s responsibilities include collecting assets and paying bills so that your beneficiaries receive their inheritance. Select an executor you can trust and who is willing to handle this job.
What would happen to your dependents if you died today? Are you prepared to provide for their care, including guardianship and money for their education and upbringing? If you have minor children, it is imperative that your estate plan addresses all these issues. It is a good idea to discuss this responsibility with your chosen guardian, should the situation occur, before they are officially appointed.
A Power of Attorney is a legal document that gives a nominated person the legal authority to act for you to manage your assets and make financial and legal affairs on your behalf should you become incapable of doing so yourself
An Enduring Power of Guardianship is a legally binding authority for a person to make welfare and medical decisions for you if you become mentally incapacitated, similar to an Enduring Power of Attorney (EPA). You need to be able to rely on this person to know and respect your essential lifestyle and medical needs. See Advance Health Directive below.
Your wishes may be expressed in an Advance Health Care Directive should you become incapacitated or otherwise unable to make medical choices for yourself. Your medical treatment options and how your body is treated might be specified in the event of an accident. An Advance Care Directive will make it easier for your loved ones and health staff if they need to make decisions for you.
A testamentary trust is a trust that is written in your Will. It takes effect when you die, and it’s administered by an appointed trustee. If you have significant assets and several people who will benefit upon your death, then you may wish to start a Trust. This will give you control over the distribution of your assets, help you avoid probate, and potentially avoid estate taxes. It is this flexibility of a trust that allows you to protect your money and control how your children (or other beneficiaries) spend their inheritance.
Having a trust fund for your children makes sure they are going to be protected and financially secure no matter what happens to you. A trust allows you to keep money out of the hands of your children until they’re older and more able to handle it as you can set funds aside for essential future expenses, such as education expenses or paying off your home. Your children will gain control of the trust when they turn 18, however, you can also choose to defer trust access.