What is Estate Planning?
Estate planning involves the organisation of a person’s legal and financial affairs so that your assets are distributed to your intended beneficiaries in an orderly and tax-effective manner.
A properly constructed estate plan involves the integration of all your legal and financial matters.
If you are a diligent reader of our articles, then you will already be aware of the importance of having a valid will. However there are other things that you should do to make the lives of your executors and beneficiaries a lot easier.
Estate Planning Checklist
We have put together a checklist of some things that you ought to do before you die – an “if I kick the bucket then…” list so to speak. The checklist should be kept in a safe place identifying where the original will and enduring power of attorney are kept. The list should include either a copy of the Will or at least mention the date on which it is signed.
The checklist should include:
Accounts and Investments:
The BSB and account numbers for any accounts or credit cards you have as well as the details of any shareholdings and real estate.
Include sufficient details of policies such as the policy number and type of insurance.
The registration number and VIN.
If you have an accountant, financial planner, lawyer or other professional advisor include their contact details. If you have a business include details of where the company records are kept.
If important documents (such as certificates of title), valuables or personal items are being held in safe custody elsewhere you should identify the location.
Your digital life:
Include all your email login in details and loyalty scheme account details. This includes your membership to social media and cloud data sites so your executors and family may be able to access your on-line data, including books or music files.
If you have any direct debits in place you should include details so that they can be cancelled pending a grant of probate.
Your most recent superannuation statement(s) should also be included. If it is self managed super, the deed and financial statement should be included.
And lastly, tell your executors:
Make sure your executors know where the list is!
If you follow these steps, it will make the job of your executor far easier. You would be surprised by the amount of time and money that can be saved when an executor does not need to spend weeks searching through your belongings and paperwork trying to figure out the details of your life.
What are the components of an estate plan?
A properly constructed estate plan involves the following:
- Will: A will is the central part of any estate plan. It sets out how you want your assets to be distributed and can be as straightforward or comprehensive a document as necessary.
- Power of Attorney: Your power of attorney operates in circumstances before death where you may be suffering from either a temporary or permanent legal disability and are unable to make decisions for yourself.
- Testamentary Trust: A testamentary trust can be used in conjunction with a will to provide for ongoing control of your assets after death. It may be used when there is a concern that the assets are at risk of dissipation through blending of families, divorce or legal proceedings involving your children.
- Superannuation: This does not form part of your estate but it should be considered as part of your estate plan. There will be some occasions where a superannuation death benefit should be paid to your estate and others where it is more beneficial for the superannuation to be paid directly to your nominees.
- Financial Goals and Insurance: This is included for completeness so that all matters relating to your financial affairs, including insurance, are taken into account and are not forgotten.
The executor is the person who administers and carries out the terms of your will. The appointment of an executor is done as a term of your will. Your will creates a trust and your executor of the estate is the person who holds the estate in trust. That person becomes the trustee for the deceased estate trust. The executor is responsible for administering the deceased estate in the best interest of the beneficiaries of the estate.
What happens to the kids if I die?
It is a comforting thought to know that there are arrangements in place for your children should you suddenly pass away. We have a lot of new families who ask us to write up their Wills after their first child arrives. It is great assurance to know that your intentions are clearly written down should something unexpected happen.
You can appoint a person over the age of 18 to be a guardian for your children. This person is referred to as a ‘testamentary guardian’. The appointment of a guardian has to be done in accordance with the laws of the state of territory in which you reside otherwise it will be ineffective.
There are more difficulties to overcome if you are separated from the child’s other parent and you would like to appoint someone else apart from the surviving parent as the children’s guardian.
Alongside giving them responsibility to care for the day to day needs and decisions regarding your children, you are giving them long term responsibility over the long-term care and welfare of your children.
In the event that the testamentary guardian is appointed, the guardian then has rights and duties subject to the Family Law Act. If there is ever a dispute regarding the appointment of the guardian or the care of the children an application can be made to the Court. The Court will then consider what is in the best interests of the children.
Who cares for your children in the event of your death is a different consideration to who controls your finances and how they will be distributed to your children. You should consider whether the guardian should have access to financial assistance for your children through your executor and/or financial reimbursement. You can appoint different people or the same person to be your executor and testamentary guardian.
When discussing how your finances should be controlled in the event of your death and an appointment of a guardian, you need to consider your children and the guardian’s future needs including housing, education and medical expenses.
You may wish to leave a statement of wishes to your executors. Whilst this is not a legally binding document it does document your wishes and can be used as evidence in Court if there is ever a dispute. Your statement of wishes can also include who you would like your children to be looked after in the event that you’re appointed guardian cannot begin their role immediately after your death.
If you would like to get a Will a drafted or change your existing will to include a testamentary guardian you should contact one of our estate planning lawyers today.