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Estate planning

The importance of estate planning

Drawing up or revising a will is not something most people like to think about, however it is an important part of life no matter what your age – especially if you have a variety of assets and/or investments.

In Australia, will and estates fall under two areas of law known as succession law and probate, and in most cases, they’re designed to ensure that the final wishes of a deceased person are fulfilled wherever possible. Without a will however, this can be an expensive, time consuming and often distressing process for family and loved ones.

Contrary to popular belief, if a person dies without a will (known as ‘dying intestate’) their estate does not automatically get transferred to the government.

Instead, it is administered and distributed (usually to family members) according to a specific set of criteria. This criteria however, doesn’t necessarily reflect the deceased’s final wishes. That is why estate planning and having a valid will are important.

Leaving a clear, unambiguous will, and a list of all your important documents (e.g. Land Titles, share certificates, superannuation details etc.) will make it much easier for your executor to carry out their duties.

Other decision makers

Estate planning should also include setting out your wishes in the event you are unable to make decisions about your assets or your health. This could include appointing:

  • A general power of attorney: set for a specific period of time when you’re unable to make financial or legal decisions (e.g. you’re off trekking in the Himalayas)
  • An enduring power of attorney: takes affect only if and when you become incapable of making legal and financial decisions for yourself
  • Medical power of attorney: can make medical decisions (but not legal or financial decisions) about you if you’re unable or incapable of doing so.

For peace of mind – for both you and your nominated decision-maker – it’s wise to draw up directives, clearly stating how you wish decisions to be made. Anticipatory directives, Advance Healthcare Directives and ‘Living wills’ clearly set out medical treatment you want or don’t want, if you’re unable to make those decisions yourself. They can be general or very specific, detailing the type of care or medication you’re willing to receive or deny if you’re unable to make those intentions known personally, at the time.

Common terminology

The essentials -

  • Beneficiary: a person or organisation who receives something in your will
  • Estate: all your assets, including your share in assets held jointly with someone else
  • Executor: the person responsible for finalising any debts out of your estate, and then distributing the remainder to your beneficiaries (this may include selling assets and distributing the proceeds) 
  • Intestate: dying without making a valid will. The distribution of the estate is then carried out in accordance with a ‘Letter of Administration’
  • Probate: a legal document provided by a state’s Supreme Court, declaring that a will is valid, and that the Executor has the authority to distribute your assets and administer your will
  • Will and Testament: a legally binding document that details your final wishes with regards to the distribution of your estate after you die.

Estate planning checklist

To make things easier for your executor and beneficiaries, you should consider all the tasks that your executor will need to manage, when paying off debts and distributing your will.

Your will: firstly make sure you have one, and you tell your executor where it is

Debts: list details of personal loans, credit cards, store cards and mortgages. These will need to be paid out of your estate before it’s distributed to your beneficiaries

Assets: these can be very diverse and wide-spread, so ensure you include details (and locations) of:

  • Property deeds
  • Share certificates
  • Superannuation funds
  • Bank accounts
  • Investment accounts
  • Collectables 
  • Bonds and other tradable investments
  • Motor vehicles, boats etc
  • Cash
  • Personal assets such as jewellery etc
  • Contact details of all beneficiaries

Professional advisors: list the contact details of any financial advisors, lawyers and stock brokers – especially if they’ve arranged estate planning strategies designed to minimise tax or maximise capital gain

Insurance details: life policies including any death and permanent disability cover held with your superannuation fund

Funeral arrangements: especially if you have arranged a pre-paid funeral plan

Writing a will

If your estate is fairly straightforward, it is possible to write your own will. Will packs can be bought at Australia Post offices and many newsagents, or downloaded online.

For more complex estates or distributions, then it’s wise to get help from a solicitor or the public trustee in your state. In such cases, you can also appoint them to be your executor. You will need to pay for their services though.

Who you name as beneficiaries, and how you choose to distribute your estate is entirely up to you. Just ensure that your will -

  • Clearly identifies your beneficiaries
  • Clearly identifies your executor
  • Is dated correctly 
  • Is signed correctly
  • Is witnessed correctly
  • Lists exactly how you want your estate to be distributed amongst your beneficiaries (including contingencies if they die before you)
  • Is up-to-date

If you choose, you can also include preferences for your preferred funeral arrangements.

Public trustees

Each state/territory has a trustee office to manage intestate estates or step in where an executor is unwilling or unable to carry out the duties. In most cases, the public trustee can also be appointed in a will, to act as the executor. Fees for their service are usually paid for out of the estate.

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