Estate Planning in Australia – Why It’s More Than Just a Will
In Australia when you say “estate planning”, the typical response is to think about implementing a Will. While a Will is undoubtedly an important part of an estate plan, it is just one part of the estate planning process. Estate planning is really about ensuring you are addressing your wealth, superannuation and personal affairs in accordance with your wishes, and to protect your family and loved ones with less legal difficulty.
You may not consider yourself wealthy but having an estate plan means you have ensured your loved ones will be supported, your wishes clearly expressed and your affairs will be properly divided up.
What does estate planning entail?
Estate planning is a holistic process that covers multiple elements.
Estate planning involves a complete process and takes many different forms:
- Wills – Direct how your property, investments and personal effects will be distributed.
- Superannuation nominations – Your Super fund does not simply fall to your estate so, to ensure your wishes are carried out (ATO – Super death benefits), you must nominate your beneficiaries.
- Trusts – Structures established to manage wealth for family members’ or charitable purposes.
- Power of Attorney – Most often a legal document authorizing someone to make decisions on your behalf in the event you are unable to manage your affairs.
- Insurance policies – Life insurance, income protection and total & permanent disability cover to protect dependents and deal with potential liabilities of your estate.
Why Estate Planning Matters
If you do not have an estate plan, your wealth may be passed according to general legal processes, which is unlikely to be what you really want. The lack of estate planning may lead to:
- Conflict between your family members as to who gets your assets
- Delays in passing your assets
- Higher legal and administrative costs
- Uncertainty for your dependents
Key Considerations in Estate Planning
- Identify your beneficiaries: Choose who you want your generosity to benefit and how. This includes family, friends, and maybe charities.
- Reduce chances of disputes: Having good paper work (such as a will and letters of wishes) can help diminish misunderstandings amongst heirs.
- Superannuation and tax: Superannuation is often one of the larger assets in your estate planning considerations. Parents should have an understanding of the tax that applies to death benefits, and consider how to correctly nominate beneficiaries of their superannuation, as there are rules that govern this.
- Powers of attorney and guardianship: Having someone you trust appointed as a power of attorney can safeguard your financial and/or medical decision making if you lose capacity.
- Regular reviews: Life happens, and changes – marriage / children / divorce / moving interstate – this can impact your estate planning. Regular reviews of your estate is essential to keeping things current with your wishes
Estate Planning and Retirement
Estate planning is closely linked to retirement planning. For instance, if your super is structured correctly and your will is clear, your retirement assets can pass to your family smoothly. Estate planning ensures that your super, investments, and property complement each other while reducing stress and complications for loved ones.
Curious how retirement strategies and super fit into the bigger picture? Read: Why Every Australian Needs a Financial Plan for the Future
Actions to Begin
- Assess your assets and liabilities – This covers property, super, investments and personal belongings.
- Select your beneficiaries and guardians – Define your beneficiaries clearly and how you want them to benefit.
- Record your intentions – Draft a will, prepare super nominations and consider trusts if appropriate.
- Obtain professional support – Each state has differing estate laws and these laws can be complicated. An expert will help ensure that your wishes are legally binding and compliant.
- Review your plans regularly – Changing life events and a change in law can affect your estate plan. You should look at your estate plans every couple of years.
In Summary
The estate planning process is about clarity, protection and peace of mind. It allows you to care for your family, your assets and your legacy; how you want it to be. Coupled with prudent superannuation and financial planning, it provides a whole-of-life approach to financial security now and in the future.
Call to Action
At MacMoney, we help Australians design estate plans that work hand-in-hand with retirement and super strategies. Protect your family, simplify decision-making, and ensure your wishes are followed.
Contact us today to start planning your estate and securing your future.
FAQs
A will is simply a document that directs how your assets will be distributed. An estate plan is a wider strategy, which includes wills, superannuation, a trust, insurances, powers of attorney, and ultimately how your assets will be transferred.
Yes. Estate planning is not just for people who are wealthy. It respects your wishes, gives protection for your family and makes decisions clear when you can no longer make them.
Your estate will be distributed in the manner prescribed by your respective state’s intestacy laws, which may not be in accordance with your wishes.
Yes, your super does not automatically go through your will, therefore you need to have nominations in place to pass your super to your nominated beneficiaries.
So a person you trust can manage your finances and make decisions when you can’t due to illness or incapacity.