Estate planning is a way to ensure that your loved ones are taken care of after you're gone, but with all the various aspects involved it can be difficult to create a thorough solution. Knowing what documentation is required to ensure that your assets are passed on in the most simple and effective way possible is important. So what are the five areas that you need to think about?
1. The Will
Preparing a Will is often the first thought that pops into people's heads when considering estate planning.
A Will is your way of providing instructions on how you'd like your assets to be distributed between beneficiaries. If you have children or dependents, it covers who their care will go to, and you can also include any wishes you have when it comes to your funeral and burial or cremation.
When writing a Will, it is important to consider probate requirements, and who you want to appoint as executor. However, it's not the only document needed if you want to create a thorough estate plan.
2. Superannuation death benefit nomination
When someone dies, the total amount of money in the deceased's super account is paid either to a dependent, or the individual's estate. If the super fund includes life insurance, the payment from it is included. This money can be important in making sure that you leave your loved ones financially secure.
When setting up an estate plan, it is possible to create a binding or non-binding nomination for who you would like the benefit to go to. With a binding nomination, your super fund trustee has no choice with how to distribute the money, while a non-binding nomination is more of a guide and the final decision is given to the trustee to make.
3. Testamentary trust creation
Wills can establish testamentary trusts as long as they proves valid under probate. A testamentary trust is different to a living trust in that it is only created when the person for who the Will belongs passes on, and it can be a tax-effective way of leaving assets to heirs and beneficiaries.
Another benefit of creating a testamentary trust is being able to choose when someone will inherit.
Another benefit of creating this trust is being able to delay when someone will inherit. For example, if you have dependents you may decide that your assets will only be passed on when they are old enough to be able to manage them. Creating a testamentary trust to ensure that everything is handled until that time takes the burden off your heirs.
4. Powers of attorney
Choosing an enduring power of attorney involves finding someone you trust to make decisions for you around your assets and financial affairs. If an injury, illness or absence causes you to temporarily or permanently be unable to make a decision, the appointed person will step in to do it for you.
However, their powers do not include making medical decisions.
5. Power of guardianship
Should you lose your mental capacities, for example through dementia or a stroke, having someone that you've given the power of guardianship to means that they are in control of your medical decisions. Required to make these choices in your best interest, they also need to take into account any wishes you've made.
When thinking about this, it's wise to document clearly the choices you'd like made if certain scenarios came to pass. By doing this, you remove the stress and emotional turmoil for your appointed person that comes with making these hard decisions, while also knowing that you're retaining control of your own life.
Remember to update all these documents regularly, to make sure that they account for any changes in circumstances that may occur.
For business owners, succession planning also needs to be covered and is especially important when there is more than one owner. Preparing a strategy for your business should something happen to you can allow the continuity of the company, while also smoothing out what will be left for your family. This plan will take into consideration who succeeds you, how finances will be handled during the transition, and also confront and deal with any risks that may come up.
There are a lot of legal considerations when it comes to succession planning, and ensuring you have an effective strategy in place to deal with them will give you peace of mind.
Why having a thorough estate plan is beneficial
The time after losing someone is full of emotional turmoil. Worrying about probate, and what will happen with assets and finances, is something most people are unlikely to be in a state to deal with.
Creating a secure, straightforward estate plan is a way to help your loved ones through it all, reducing unnecessary stress and leaving them able to focus on supporting each other.
If you'd like to know that your assets will be passed on in the most simple and effective way possible, contact WMC Accounting today. We will walk you through the process step by step, giving you reassurance that your loved ones will be taken care of.