Estate planning encompasses a range of aspects – and there are benefits to be had now from reviewing your estate plans, as well as significant upside in the future when you take steps now to help avoid tension and misunderstanding at what will already be a difficult time for your loved ones.
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Here are the key aspects involved
Your will forms the centrepiece of your estate plan. This important document states how you want to transfer your assets – your possessions and property - after your death.
If you pass away without a will, known as dying intestate, your estate will be distributed according to a state government-determined formula. Chances are, this formula won’t reflect your wishes, so it is important to speak with your Mortgage Choice financial adviser to arrange for a legal expert to prepare a formally drafted will of your own deciding.
Broadly speaking, your will should:
- Provide directions on how your estate should be distributed,
- Nominate guardians for children under 18 or any other dependents, and
- Make provisions for the people who depend on you financially
Your Mortgage Choice financial adviser can help you arrange a professionally prepared will. This not only gives you peace of mind that your wishes will be followed, it can prevent any potential issues later on from people trying to contest your wishes.
Your executor is responsible for managing and distributing your estate in line with your will. Some people choose an adult child as their executor, however this can put an additional burden on loved ones at a difficult time.
You can also nominate an independent party such as your solicitor to be your executor. The fees for this service are usually paid from your estate.
A Power of attorney lets you nominate a person (your attorney) to act on your behalf when you can’t do so yourself.
It can be useful if you are heading overseas for an extended period, and you need a trusted person to manage your money while you’re away.
As we age however, a power of attorney becomes critical should you no longer have the capacity to manage your financial affairs yourself.
Your Mortgage Choice financial adviser can explain how establishing a power of attorney is appropriate for your circumstances.
A testamentary trust is established as part of your will. It allows the trust to hold assets from your estate for the benefit of other people – the trust beneficiaries. In this way, a testamentary trust can be used to provide for the financial wellbeing of children or family members with special needs, for an extended time after you have passed away.
As parents, we never want to think that we won’t be around for our children. But by nominating a legal guardian in your will, you at least have control of who cares for and raises your kids if you pass away.
Your super cannot normally be bequeathed through your will. You will need to complete a binding nomination to let the trustees of your super fund know who you would like to inherit your funds.
The decision about who inherits your super does call for professional advice. There can be tax implications for beneficiaries who are not dependent on you. Your Mortgage Choice financial adviser can provide you the information you need to help you make the right decisions.