Looking After Your Loved Ones After You're Gone
Most of us put a lot of time and effort into creating and managing wealth throughout our lives. But few of us put enough thought into how our wealth will be distributed after our death – estate planning.
What is estate planning?
Estate planning is a process which ensures that your property, money and other assets are distributed according to your wishes after your death. Effective estate planning can help minimise potential tax consequences for your loved ones and other recipients of your estate.
The process involves three steps:
1. reviewing your current financial situation;
2. deciding what you wish to achieve for your intended beneficiaries in the event of your death; and
3. setting in place the appropriate arrangements to support and realise your wishes.
Why do I need an estate plan?
If you don’t have an estate plan, it could mean your assets are distributed to people you did not wish to be beneficiaries. It could also mean people you did intend to benefit from your estate end up paying more tax than may otherwise have been the case.
What estate planning tools are available?
A valid will plays a vital role in any good estate plan. A will is a legal document that provides direction for the executor of your estate in distributing your assets to the beneficiaries you wish to receive them.
Some other estate planning tools you may wish to use include:
- a testamentary trust;
- a binding nomination for payment of your superannuation death benefit; and
- life insurance.
How do I create a valid will?
While the rules around creating and administering a valid will differ between states and territories, there are generally a number of common requirements:
- the will must be in writing;
- it needs to be signed by the person making the will and two independent witnesses at the same time;
- the witnesses must not be beneficiaries, or related to a beneficiary of the will;
- witnesses must be aged at least 18; and
- the person making the will must be aged at least 18 (or under 18 if married), and of sound mind;
- a solicitor is required to complete the will process.