Estate Planning is much more than having a will – it’s about planning for what happens to your assets and affairs after you die, as well as who takes charge of your affairs in the event you lose capacity. Sadly many Australians don’t even have a will.
The objective when putting together your estate plan is to pass control and ownership of your “estate” assets and interests to the right people in a timely way in the most tax-efficient manner.
In the process you want to protect the assets and interests you wish to distribute. That is, you’ll want to maximise asset protection for beneficiaries from, say, bankruptcy or a relationship breakdown – you don’t want your assets left to a son or daughter’s other half if things go wrong between them.
Also consider the impact on beneficiaries with government benefits. There’s no point leaving assets to someone who doesn’t want them because they’ll lose income support payments. It’s astounding the number of people who ask how to re-direct an inheritance because it’s going to affect their government payments when they could generate more income and be better off investing the inheritance properly.
You should also think about who you don’t want your assets going to and how you’ll deal with those individuals. If you leave out of your will someone who considers themselves entitled, they may challenge it. If you do not make adequate provision for the proper maintenance, support, education or advancement in life of certain persons, a court has the discretion to make an order for that provision.
Plan for someone to take charge of your affairs in case of incapacity, so you’ll need to appoint an attorney.
You need to identify the owner(s) of your most valuable assets and interest as not all assets are “estate assets” dealt with via your will. For example, assets owned in your own name (property, shares, cash), assets owned as tenants-in-common and certain business interests are estate assets. But assets owned jointly, superannuation, life insurance, interests in discretionary trusts and certain business interests are non-estate assets and not dealt with in your will.
Typically, a person’s largest assets are their home and super.
The home is often owned jointly between spouses which automatically transfers to the surviving spouse on death. It is not dealt with in your will as it is a non-estate asset.
Your super is also a non-estate asset and therefore not dealt with via your will, unless you specifically leave it to your legal personal representative – the executor of your estate.
If you require help with understanding what’s best for you, the team at Superannuation Advice Australia can help. Contact us today!