Life by it's very nature is unpredictable. For this reason, it's vital to have a contingency plan in place for the maintenance of your loved ones after your passing. In addition to traditional estate planning such as writing a Will, it's just as important to make provisions for your superannuation, too.
Where does superannuation fit into estate planning?
Like your other assets, your superannuation will be distributed to your beneficiaries. However, awarding superannuation differs slightly than that of traditional estate distribution. Superannuation can only be divided in accordance with the wishes you have lodged with the trustee or administrators of your estate. In order to legally dictate who receives your superannuation when you pass, you'll need to lodge a Binding Death Benefit Nomination form with your super fund.
Eligible parties you may choose to nominate to receive your super include:
- Your spouse or de facto partner.
- Any children, including adopted and step-children.
- Someone you have a close relationship with.
- Former or current financial dependents.
Nominated parties receive your superannuation balance as a lump sum payment, as well as any insurance payouts that may be part of the inheritance. It's important to remember that though you may have written other clauses or wishes into your Will, a Binding Death Nomination is final, and forms the basis of how your superannuation is distributed. For this reason, ensuring your Will and Binding Death Nomination forms don't consist of conflicting information will make the division process easier for both your beneficiaries and those in charge of executing your final requests.
If you haven't nominated someone to receive your super, the trustee of your fund will reach out to your estate executor or your spouse, where they'd most likely begin the process of helping your loved ones claim the superannuation as beneficiaries.
Why do I need an estate plan?
An estate plan gives you peace of mind and ensures your assets are divided in accordance with your wishes in the event of your death, ensuring that your loved ones are looked after. Many people consider preparing a Will to be the main consideration in estate planning, however, there are other factors you need to plan for, including:
- Granting power of attorney
A power of attorney is a person you nominate to handle your financial affairs and make decisions for you if you are incapacitated, for example by injury or illness.
- Advance care directive
Similar to a power of attorney but in paper form, an advance care directive outlines your preferences in medical treatment, and will be followed if you are unable to communicate. This may include instructions about future treatment you do not consent to.
It's never too early to start thinking about estate planning – even if you have little assets, it'll give your loved ones peace of mind that items special or important to you are being divided in accordance with your wishes.
How do I begin estate planning?
Though estate planning may seem daunting, it's a relatively simple process. Here's where an accountant is an incredibly valuable asset to bring onboard. An expert accountant helps you comb through your personal assets, including any trusts or superannuation, as well as helping develop a contingency plan for these possessions should you become incapacitated. Once they've helped you gain a thorough understanding of your estate, you can take the information to your solicitor to help execute your wishes, finding the best way to support your beneficiaries after your death.
To discuss the future of your estate and to start planning, get in touch with the team at WMC Accountants.