Let’s face it: no-one likes to think of death, especially their own. It’s not exactly a great conversation starter, is it? This might explain why so many people end up “dying Intestate” which means they die without a will and, as a consequence, have their assets distributed according to State law.
Sadly, the way State law distributes a deceased person’s assets among family members can often be a lot different to the way a deceased person wanted their assets distributed.
It can create a lot of unnecessary stress and conflict within a family.
So unless you’re living as a hermit with no contact or relationships with others, and you also don’t have a single possession to your name, you need to not only think about preparing a will, but do something about it.
And you need more than just a will. You need an estate plan.
Why having a will is not enough
If you have a will in place, you may not think you even need an estate plan. After all, your will spells out your “Who gets what” instructions regarding your estate, right?
Unfortunately, the estate you’ve specified in your will may not include all of your assets. By law, your will doesn’t include assets such as:
- jointly-held property
- superannuation
- proceeds of life insurance policies
- assets held in trust
- company assets.
6 more reasons to have an estate plan
A well-written estate plan can do more than just distribute all of your assets the way you want. It can also help:
Your beneficiaries (i.e. your loved ones) to reduce (if not eliminate) tax on the income generated when they receive their inheritance, and every year thereafter
Protect your beneficiaries’ inheritance from unfortunate events such as divorce and bankruptcy
Minimise or even avoid the death benefits tax when distributing your superannuation benefits
Guard against a beneficiary wasting their inheritance because of their spending habits, mental health, drug addictions, gambling or other vulnerabilities
Make capital gains tax savings on the assets distributed through your estate
Ensure your assets are passed to your preferred beneficiaries rather than, say, an in-law or former spouse.
Who should help you create your estate plan?
While an estate plan is a legal document, its creation shouldn’t be left solely to your solicitor. You need someone who knows about you, your family and your financial situation.
And the person who generally knows the most about that is your accountant or financial planner.
However, while they may know all about your finances, they may not have the legal qualifications needed to create a watertight estate plan. So you actually need your accountant or financial planner and a solicitor.
Avoid leaving a trail of chaos behind you
Whether or not you have an active will in place, without an estate plan there’s no telling who your assets may end up with. Avoid creating stress and conflict for your loved ones, and give yourself the peace of mind in the here-and-now that your affairs are well in order.
