The importance of Estate Planning

31 Dec 2014 1:19 PM | Deleted user

During your working life, you focus on saving and building wealth. But too many people forget that it's just as important to plan for the transfer of your wealth once you've gone. Current statistics show that 60% of Australians do not have a valid Last Will and Testament in place, and have not planned for unforeseen events that could affect their ability to manage their affairs.

What is estate planning?

Estate planning is about peace of mind. Estate planning is all about putting the right structures in place to make sure your assets are distributed the way you want and in an effective way. Estate planning also includes documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.

Why is an estate plan important?

An estate plan involves much more than just having a Will in place. Although it’s important to have a valid Will, an estate plan covers many other aspects relating to the transfer of your wealth after you pass away. Family trusts, powers of attorney and the tax implications for beneficiaries can all be managed with an estate plan.
Also, with blended families becoming more common in recent times, estate planning has become more important for those with complex family structures.

What are the benefits of having an estate plan?

By having an estate plan in place, you will help your beneficiaries avoid difficulties and disagreements because you can:

  • stipulate the amount of ownership and control each of your beneficiaries has over your assets
  • reduce the tax payable on the income and capital gains earned on assets
  • ensure your assets are protected if the beneficiary is involved in any legal difficulties such as divorce or bankruptcy, and
  • determine who can make financial, legal and medical decisions for you if you lose the capacity or become unable to make your own decisions.

Developing an estate plan

There are a number of things to consider when planning for the distribution of your estate once you’ve passed.
The first step is to make sure you have a valid Will. But a Will is just the beginning. An estate plan allows you to put plans in place for once you’ve gone, but also for while you’re aging.
Ask yourself the following questions:
Who’s in charge? Who can manage your affairs for you if you become injured or sick and no longer able to manage your finances or make decisions about your medical and lifestyle conditions?
Who gets what? Who will inherit which assets and in what proportions after you pass away?
How much debt? In the event of your death, do you have enough to provide for your family and pay off debts?

A good estate plan should minimise the tax paid by your heirs, and help avoid any family squabbles. Documents included should cover:

  • Will
  • Enduring Power of Attorney
  • Testamentary Trust (Family Protection Trust)
  • Advance Health Directive (also known as a Living Will)
  • Executor assistance

Steve Garden is a Law Clerk for Australian Probate Lawyers and can be contacted as follows:

Phone: 0438 328 619

Email: steve.garden@australianprobatelawyers.com.au

Web: http://australianprobatelawyers.com.au/Steve-Garden/

 


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