Making Your Estate Plan Count

Written and accurate as at: 10 February 2016

Whatever your age or stage of life, having an estate plan in place is a must. This is a way to ensure that your wishes are carried out and that your assets are distributed in the way that you want upon your death.  It also reduces uncertainty for your dependants and other family members. Planning your estate can minimise tax and ensure that the right people get the right assets at the right time.

Everyone’s circumstances are different, for some an estate plan will be a fairly straightforward process and for others it will be more complex.  Things like the complexity of your family situation and the types of assets you own will influence this.  

Your estate plan will generally be centred on your Will , and putting arrangements in place for superannuation and other assets that may not be covered by your Will.  For some people it may also involve setting up a trust via your Will.  Powers of Attorney are normally also considered when planning one’s estate. There are various forms of Powers of Attorney, essentially giving someone the right to act on your behalf in certain situations.

Regardless of the size of your estate, it is critical to seek professional advice on how best to proceed in your circumstances, your financial adviser is a good place to start.

As you go through this process, there are some things you should remember:

  1. Choose appropriate people to take on the roles of the executor of your Will and your Powers of Attorney and make sure that they understand and are able to carry out their responsibilities.  Take time to share your wishes with them. 
  1. Aim to be fair and make adequate provisions for your dependents and close family members.  Where you wish to exclude someone from your Will, seek professional advice on how this is to be expressed.  A person who feels unfairly provided for may have grounds to contest your Will and this can be a stressful and costly process for family members while also damaging relationships. 
  1. Be specific about how your assets are to be distributed and make provision for the payment of taxes and debts.  Not doing so can result in some beneficiaries receiving less than you intended.
  2. Account for assets that are not distributed via your Will.  These can include superannuation, proceeds of life insurance policies, jointly held property or assets held via certain trust structures. Often these assets need to be considered as part of the estate plan, but outside the Will.
  3. Ensure it is tax-effective. Capital gains tax can apply on the disposal of assets by a deceased estate and this can be costly. A lump sum superannuation tax may also apply in some cases.  There are structures that you can put in place to minimise these taxes.
  4. Consider any special circumstances in your family, including your own relationships and those of your children and other beneficiaries.  If you have a spouse, child dependants or disabled dependents think about what will be needed to assist them. As far as possible, provide instructions on how the assets of the estate are to be treated in the case that changes occur in your family for example, marriage, divorce or the birth of a child. Your financial adviser can guide you on the possible scenarios that should be considered.
  1. Once you have your estate plan in place, ensure that you review it at regular intervals and after significant events to ensure that it is still relevant.