Important considerations when it comes to estate planning
1. Asset ownership
Understanding the assets you own, their legal structure and how they will be dealt with and distributed on your passing is important. How you choose to set up your asset ownership will depend on the type of asset and the level of complexity in your estate plan.
You may want to consider how your assets are owned, particularly if you have complex family arrangements or if you have specific tax management requirements.
You should consider consulting with your financial adviser when considering making an investment or changing the ownership arrangement of your assets to ensure that is is consistent with your estate planning needs.
2. Having a will, appointing the right executor and Power of Attorney
Dying without a valid will means that intestacy laws decide who receives your assets. These laws vary between states and territories but generally there are set rules regarding who receives your assets and in what proportion they are distributed. Having a will and documenting how you would like your assets to be distributed after you’re gone is essential in meeting your wishes.
Put simply, a will is a legal document that sets out how you would like your assets to be distributed after you’re gone. It can cover some other requests, such as nominating guardians for children who are minors at the time you die, as well as funeral and burial wishes. Appointing the right executor to manage your estate is one of the most important decisions you will make when it comes to estate planning. When you pass away and your will is accepted for probate, your executor ‘steps into your shoes’ meaning they can perform all the legal tasks you used to do.
Appointing a Power of Attorney is just as important to ensure your wealth is distributed according to your wishes if you lose capacity and cannot make decisions before you die because of an accident or ill health. You should choose an appointed attorney you can trust that will act honestly, diligently and in good faith, act with reasonable skill and care and keep accurate records and accounts.
3. Considering your superannuation nominations
Superannuation is a major investment for many Australians. It is important to consider your superannuation assets when formulating your estate planning strategy.
Superannuation does not automatically form part of an estate and therefore will not automatically be dealt with under your will. A superannuation fund’s rules sets out how and to whom a superannuation death benefit payment can be paid. Any life insurance component of your superannuation will also form part of any death benefit payment made.
It is important to ensure you understand exactly how your superannuation beneficiary nominations will be treated by your superannuation fund and the potential impact on the benefit value after any tax that might apply. Nominating a non-tax dependant to receive your superannuation benefits may result in a reduction in the benefit payment amount to the nominated beneficiary.
