The Importance of Estate Planning

Written on the 20 April 2023 by Parkside InvestorPlus

Regardless of where you are in your retirement journey, i.e. some years off, just around the corner or you’re in retirement, the one aspect that nearly half of Australians, (estimated to be 45%) is that they do not have a valid Will, and most have not made a binding death nomination for their superannuation.

Organising your Will (ideally with your partner) may seem morbid, however, if you think about it, when it’s time for you to depart this physical plane, without a proper and legally binding Will in place, chances are you could potentially leave behind a mess for your loved ones to deal with.

The hard-earned money that’s gone into your super, your home, your other assets could now all be up for grabs by anyone.

Having an estate plan is among the most important things you can do for your loved ones.

It is, however, a task many of us dread and put off dealing with until later in life.

And if there is one thing I can recommend, it is that it is never too early to start planning, but it can be too late.

What is an Estate Plan?

We all may have heard about estate planning, however, many of us may not be sure what it entails or involves.

An estate plan is a collection of legal documents that sets forth how you want your assets distributed when you pass away, and how you want people to handle health and financial decisions if you are unable to do so for yourself during your lifetime.

A comprehensive estate plan can help you feel more confident about the future, knowing your loved ones will be taken care of and that the legacy you leave behind is the one you want.

Thoughtful planning now can help minimise taxes and probate fees and ensure your family will have less to worry about when you are gone; however, when you are gone, failing to make plans for your estate can lead to complications and misunderstanding for all those who are left behind.

Also, estate planning is not just about making clear who gets what within your immediate family, rather, you may also want to include the descendants of your children/siblings to also benefit from your assets through trusts and the like.

What is included in estate planning?

Depending on your personal circumstances, an estate plan can include many elements, not just what happens with your immediate assets such as home, super and cash.

However, some key inclusions are:

• Nominating your financial attorney through an enduring power of attorney document
• Nominating of your medical decision maker
• Nominating your beneficiaries
• Appointing an executor or your Will
• Instructions on how you would like your superannuation, property and assets distributed
• Instructions on who will manage your financial and legal affairs if you become incapacitated
• Nomination of a trustee for any trusts that were established during your lifetime
• Establishing and administering any trusts after you pass away

What are the intended outcomes of estate planning?

Typically, estate planning seeks to achieve the following outcomes:

• Minimising the risk of a challenge to your estate
• Protecting vulnerable beneficiaries through the establishment of trusts
• Protecting assets on behalf of beneficiaries who could face bankruptcy, divorce or legal action
• Minimising tax implications/liabilities for both the estate and your beneficiaries
• Ensuring you receive the right financial and legal assistance when you need it the most

There are many online options for setting up a will – however, a proper and legally binding estate plan is much more than simply a document that states who gets what, this is where professional input can save a lifetime of pain for your loved ones when you’re gone.

If you have not yet considered or are considering setting up an estate plan to safeguard your hard earned assets, then talk to us, Parkside InvestorPlus.