But if you care about your loved ones, it can be far less stressful on them if you leave clear directions on how you would like things handled.
Having a valid and up-to-date will is a great start to ensuring those left behind get the assets you would have liked them to have and that dependent children are cared for according to your wishes.
But a will is only part of estate planning, which should form part of any financial plan. Not all assets can be dealt with in a will and a will only takes effect when you die. Dying without a will or one that is invalid means dying intestate. When this happens, after debts are paid from the assets in your estate, the remainder is distributed according to a predetermined formula.
This may mean certain family members receive more or less than you intended and any accumulated wealth may be at least partially destroyed through unnecessary taxes.
It is estimated that as many as 60 per cent of people die intestate and that of the 40 per cent who do have a will, many aren’t even sure where it is or whether it is valid.
Just like a financial plan, a will needs to be reviewed and updated when your life changes, such as with the birth of a child or a divorce. It also needs to be signed and witnessed in a specific manner and kept in a safe place.
The best way to make sure all your affairs are in order is to establish an estate plan with the help of a solicitor. This doesn’t just involve a will. It also involves taking into account how you would like your personal and financial affairs handled if you lose the capacity to make decisions for yourself, due to age or illness. Appointing a trusted friend or relative under an enduring power of attorney gives them legal authority to look after your affairs on your behalf.
There are two main types of enduring powers of attorney for estate planning purposes: one to enable financial and legal decisions to be made on your behalf and a second to enable medical and lifestyle decisions to be made on your behalf.
With compulsory superannuation contributions and their generous tax concessions, it is little wonder superannuation has become one of the most valuable assets outside of the family home. What many families are not aware of however, is that both superannuation and life insurance policies (whether held inside or outside of super) are not covered under a will.1 Financial advisers can work closely with their clients to ensure these valuable assets outside a will are accounted for according to each client’s overall estate planning requirements.
In the case of superannuation, it may be possible to make a binding death benefit nomination, which ensures the trustees have clear instructions as to the intended beneficiaries.
A person’s death can be emotional and stressful enough without surprises. The best way of ensuring your assets, insurance and superannuation are preserved according to your wishes is to seek help from a trusted professional.
Take Anthony who has three children, two with his first wife and one with his second wife. His will stipulates his new wife to be the beneficiary of his estate. Rather than leave it to chance that she will give something to his older children, he directs the trustees of his superannuation fund to pay the death benefits equally to the two children. Anthony also has a life insurance policy outside of his superannuation and nominates the benefits to be paid to a trust within his estate, identifying his youngest child as the beneficiary when she turns 18.
Do you have your will and insurances up to date?
Or do you need to put something in place to better protect youself and loved ones? To arrange an appointment to speak with one of our advisors call us on 02 9328 0876.
1 Unless super is paid to the estate or the beneficiary of an insurance policy is the estate.
General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.