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Estate Planning for Families and Businesses

Estate Planning for all generations

Estate Planning For You and Your Family

Here at Wealth-IQ we take the subject of estate planning seriously. We have seen and/or heard many estate planning horror stories. Given that’s the case, we have vowed to do our best to have our clients avoid estate complications.

As it happens, an unfortunate fact is that many families find themselves in difficult  circumstances upon the death or disability of a family member.

An Estate Plan is not the type of thing most people think about very often. However, if you haven’t already done so, NOW is the right time to put your affairs in order.

You may be thinking “I don’t have to do anything about it because I’m young and healthy”. Or is it more a case of – “I know that my family will do the right thing if something happens to me”. Or even – “I don’t own much, so there’s no point in me doing anything”.

The reality is of course, that we cannot guarantee that the unexpected won’t happen to us. For instance – a car accident or an accident around the home (e.g., falling off a ladder). Also, any one of a variety of situations where we either end up dead or permanently disabled/mentally incapacitated can occur. Hence – being unable to look after our affairs or even make decisions about our health care.

Therefore, the truth is that “YES”, everyone needs a sufficient and up-to-date Estate Plan no matter what stage of life we are at. The solution? The sooner we get one, the better!

Do you know what makes up an Estate Plan?

In Australia, an Estate Plan broadly consists of these key documents:
  • A Will
  • Enduring/Power of Attorney (E/POA)
  • Advance Care Directive (ACD)
  • Enduring Guardianship
  • Testamentary Trusts
  • Memorandum of Wishes
  • Business Continuity
Scroll down to see more details on the first three Estate Plan components (the primary ones).

Why do I need an Estate Plan?

Most of us underestimate the true scope of our Estate by a long way.  Ergo, without proper estate planning, our Estate may not end up where we want it to after we pass. There are many reasons for us needing an Estate Plan, with the following three reasons being the main ones that apply to everyone:

Taking Care of our Loved Ones

Your death will be hard enough on your family already; you don’t want to leave them a financial and legal mess on top of it. As such, you want to make sure that spouses, children and grandchildren are properly taken care of. Unfortunately, you can’t just vaguely trust that “the right thing” will be done.

In short, a clear, comprehensive and explicit Will ensures that there is no room for doubt or interpretation. This therefore will help to ensure that none of your loved ones suffer excessive financial or emotional stress.

You can protect minors with a guardianship agreement and financial trust arrangements. In essence, this is usually in the form of a Testamentary Trust provision in your Will which will see them through to adulthood. By properly quantifying your whole estate, you can ensure that there are no items left “up for grabs” by greedy third parties. And with some discussion and agreement beforehand, you can distribute heirlooms or items of sentimental value without any fighting or debate.

Besides a Will, there are other things you can do to take care of your loved ones as part of your estate planning before you die. For instance, Australian property law allows property assets (or “real” assets) being held in multiple names. As an example: –  by spouses or partners, in which case ownership can automatically transfer to the living spouse on the death of the other. Additionally, it is highly recommended that you consider Death and Total and Permanent Disability (TPD) insurance as part of your estate planning. Above all, communicate with your loved ones thoroughly and honestly about your estate plan while you still can!

Avoiding Unnecessary Probate Costs

Are you aware that, when someone passes away, even with a Will and Estate Plan in place, Probate is usually required before any of your instructions can be carried out.

Well, Probate is the legal process whereby the Supreme Court validates your Will and gives authority to the Executor to commence distribution of your Estate. Hence, once the process is complete, the Court issues a “Grant of Probate”. This is a legal document confirming the validity of the Will and authority of the Executor. Above all, you should also know that financial institutions holding your financial assets  will usually require a copy of the Grant of Probate before releasing any funds.

The Grant of Probate is a powerful document and the Supreme Court will not issue it lightly. Consequently, if you don’t have a Will in place, have an unclear, incomplete, or poorly drafted Will, or even multiple differing Wills at the time of your death, the Probate application can become a long, drawn-out, and very expensive exercise. In addition to the emotional and financial stress it can place on families, Probate may be tied up for years or, in extreme cases, not be issued at all.

Therefore, it makes sense to have a comprehensive, clear, and detailed Will and Estate Plan in place. Rightfully, the Probate process should then go a lot more smoothly, with no unnecessary hold-ups or expensive legal hassles.

Protecting Assets

This predominantly applies to financial assets. However, if your Will and Estate Plan is non-existent, unclear, or incomplete, the Court may make determinations about your asset distribution that are contrary to your intentions. Accordingly, your Estate Plan may need to include complex asset structures and clear instructions to go with them. Similarly, if you have family or discretionary trusts, these need to be comprehensively described and covered in your estate plan. Moreover, while they may protect your family from unnecessary tax and lawsuit issues now, they add complexity and could cause issues if not properly quantified and accounted for in your Will.

The most sure-fire way to do this properly is to engage a qualified Financial Adviser and Estate Planning Facilitator and/or Lawyer.

So. please feel welcome to get in touch with us at any time for an initial friendly chat with an adviser. You can find our contact details here.

It is worth the investment for the future of your family beyond your death. Also – don’t forget to include your digital assets in your estate planning. 

Your Will

Estate Planning Factors

Your Will should be a detailed list of instructions on how to divide up and distribute everything you own (referred to as your Estate) after your death. So, it’s important that your Will covers all your real, financial, material and digital possessions. Equally, it’s imperative that it clearly instructs your appointed Executor how to distribute them and to whom. Notably, your Will can also include instructions concerning guardianship of children. Also, instructions regarding  funeral arrangements, organ donation wishes, charitable bequests (and more) can be included.

In brief, there are two types of Wills – “simple” and “complex”.

A simple Will needs to contain some basic information. You as the testator (the person writing the Will) need to name a personal representative, or the person who will make sure that the Will instructions are carried out as written (the Executor). Then you name the people (called beneficiaries) who will receive your stuff (money, property, land, etc.)

A complex Will is often required to address issues such as:

  • Changing family situations (e.g., blended family)
  • Business ownership
  • Testamentary trusts
  • Protective trusts for incapacitated beneficiaries
  • Guardianship clauses
  • Maintenance of minor children
  • Provision for the children of prior marriages or relationships.

Powers of Attorney

A Power of Attorney (POA) is a legal document, which permits an individual to act on your behalf when you can’t make decisions for yourself. For instance, this can include when you are travelling overseas, are hospitalised or impaired physically or mentally.

You can appoint one or more people to look after your legal and financial affairs to ensure that they are managed in your best interests.

Importantly, you can limit the powers the person has. For example, their ability to sell your property or manage your business affairs.

An Enduring Power of Attorney (EPOA) is a Power of Attorney document designed to continue to operate if you lose your mental capacity.

Both POA’s and EPOA’s give a person the power to act for you in legal and financial matters.

Advance Care Directive

Also referred to as a “Living Will”, an Advance Care Directive is a set of instructions specific to your future health care and allows you to make decisions regarding your health ahead of time.

As with an Enduring Power of Attorney, you nominate an individual to have authority to execute your wishes as outlined in the document. Of course, this is so decisions can be made on your behalf in the event that you are unable to.

Complete this Fact Finder to Start Your Estate Plan

An Estate Plan may consist of extra components. Having said that, in general terms, the three documents listed above (Will, Power of Attorney and Advance Care Directive) are essential in proper estate planning.
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