Providing for future generations
We’d all like to leave a legacy and provide for those closest and dearest to us once we’re gone. Estate planning is an effective method to take an overview of your assets, consider how they’re structured and how you’d like them to be distributed after you die. It’s just as important to provide for yourself as it is for the future.
A will sets out how you want your estate to be managed and distributed after your death. It can also include the appointment of a guardian for your children.
Without a will, management of your estate can be costly, time consuming and distributed according to state based legislation. It’s important to have a valid will and to review it regularly to make sure it is still in line with your intentions.
Do-It-Yourself wills have become more prevalent and are a cheaper alternative to a will prepared by a solicitor. While they may be effective for simple straight-forward estates, they don’t serve more complex estates as effectively. And a will with even a small flaw may lead to an expensive process if it is contested or it doesn’t have a residue clause which directs how to distribute assets not included in the original will.
If you were to become incapable of handling your affairs, control of your assets could revert to a person appointed by a court.
It would be more useful if you had an enduring power of attorney set up now so that if you cannot manage your affairs, someone you trust and have chosen to act for you, can make the important decisions affecting you and your affairs.
An executor distributes your assets after your death. This involves applying to the Supreme Court for probate, which gives them permission to execute your will. It can be a difficult job if your will involves setting up trusts and lodging tax returns and you should ensure they are willing and that you have nominated an alternate as a back-up in case they pass away before you do or change their mind. You should consider appointing your solicitor or using a trustee company.
A guardian can make decisions regarding where you live and your medical care if you lose the capacity to make your own decisions. It’s important to select someone you trust as soon as any signs appear that you may need these decisions made for you.
A family trust, also known as a discretionary trust, is a common structure used by small businesses to share the business’ income in the most tax-effective way among beneficiaries within the family group and to protect family assets. It is most useful where the business is generating income and experiencing growth.
It involves setting up a trust with a nominated trustee, who has responsibility for distributing the estate to your nominated beneficiaries. It can also be used to protect assets from dependants’ creditors or if a dependant isn’t capable of managing money.
The death benefit is usually paid to your nominated beneficiaries. The superannuation balance is transferred into the Cash option on notification of your death. The balance will be paid depending on who you have nominated as beneficiaries.
If you are insuring through your superannuation, you need to understand the difference between binding and non-binding beneficiaries and issues to be aware of.
If you have insurance outside of superannuation, you can nominate anyone to be a beneficiary.
The best way to look after your family’s future is to ensure you have enough cover.
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