Estate planning is not just for wealthy high flyers, preparing for the transfer of your assets after you’re gone is crucial to ensuring they actually go to the people you intend them to. Life insurance, pensions, real estate, cars, personal belongings, as well as debts, can all be part of an estate. However, there are few areas to be mindful of in planning for a smooth transfer of your assets.
Wills are important
According to the Australian Bureau of Statistics, half of all Australians pass away without a will. This can have a range of unintended consequences, including delays in settlement, assets going to the wrong parties or the will being contested at great expense. Blended families, in particular, can encounter problems settling an estate when there is no plan in place.
What is an estate plan?
While a will is a legally binding document that details your wishes regarding the distribution of your assets upon your death, an estate plan is a detailed set of documentation that explains how your life is to be dealt with before and after death.
Pick the right people
While you may think your spouse or child may be best suited to handle the affairs of your estate when you are gone, having a vested interest in the distribution of assets can be problematic. Another common mistake is appointing someone lacking the legal knowledge or organisational skills to conduct estate administration.
Don’t forget your super
Superannuation does not constitute part of your estate. The transfer of your superannuation savings after you’re gone is at the discretion of the fund’s trustee. Setting up a legally binding death nomination will override the fund’s trustee discretion and instruct them how to distribute the proceeds of your estate. For a death nomination to be binding, only ‘dependants’ such as a spouse or child can be nominated.
Plan for tax
Estate planning can help avoid tax pitfalls. For example, capital gains tax becomes payable in the sale or disposal of certain types of property. Many people arrange for the distribution of assets but only focus on the face value of those assets. Failure to plan for this may mean the value of your estate is eroded by taxes.
While estate planning can seem daunting, getting advice from a professional trustee company is the first step to protecting your loved ones and ensuring they are cared for after you are gone.
“Avoid common pitfalls in estate planning with these top tips”, The Advocate, 2018. [Online]. Available: http://www.theadvocate.com.au/story/5283781/avoid-common-pitfalls-in-estate-planning-with-these-top-tips/. [Accessed: 21- Mar- 2018].