Most of us don’t like to spend too much time thinking about when we might pass away. If your health is in good shape, you may feel like there may be no urgency. However, getting your financial affairs in order with time on your side can make good sense.
We asked Bhavesh Mistry of MistryFallahi Lawyers & Business Advisors when and how to start thinking about the legacy you want to leave behind, and other estate planning considerations.
Q. Bhavesh, when should someone start thinking about getting their financial affairs in order, and why is it so important?
People often come to us after they have had a first- or second-hand experience. For example, someone they know may have passed away without a Will, been involved in a legal battle or family dispute, or they themselves may have been through a divorce. But you really should be thinking about your financial affairs prior to this, for example, once you get into a relationship and hold financial interests with someone else, especially when a child (a dependant) is involved.
Putting valid and appropriate legal arrangements in place (and regularly reviewing them) can help ensure that your intentions and wishes will be carried out precisely and in a way that supports the financial wellbeing, stability, and growth of those you care about. For some, it’s about being able to support a purpose or mission that has been important during their lifetime. Without the proper arrangements, your loved ones may end up experiencing unnecessary uncertainty, suffering, or family disputes. These are not the kind of memories most of us want to leave behind.
Q. When thinking about passing on assets to family, people often think about creating a Will. Is a Will enough, and are there any other legal documents people should be thinking about?
A person’s financial interests can be wide-ranging, and can include a house, shares, investments, a family trust, company interests or ownership/directorship, international assets, super, and life insurance benefits. While a valid Will ensures that assets which are in your name, can be legally transferred to your intended beneficiaries, depending on your circumstances, you may wish to consider additional documents, including:
Q. What are the common pitfalls in the estate planning process?
There is often confusion around what does and doesn’t form part of a person’s estate, and also what legal rights they have in relation to each of their assets or financial interests.
Tax is definitely a common pitfall. The tax implications of transferring an asset to someone else can be significant if not properly understood, meaning your intended beneficiaries could end up with a tax bill they didn’t expect. Other common oversights include not considering foreign beneficiary tax or the cost of maintaining and preserving an asset in a testamentary trust.
Navigating these issues takes careful planning, and bringing together a qualified team of professionals (such as taxation, financial and legal practitioners) may be pertinent here.
Q. What are your top tips for someone starting to think about getting their financial affairs in order?
For couples who have been together for decades, conversations like these can provide an opportunity to express whether they wish to be buried or cremated, their intentions around medical lifestyle arrangements and their end-of-life care, and who they wish to appoint as an Enduring Guardian.
At the end of the day, a plan, whether simple or complex, is better than no plan. Even if your estate is simply a bank account that holds cash, you still need to consider how you wish to divide and allocate that cash to your intended beneficiaries. And, as the famous saying goes, there is no time like the present.