Estate planning – the basic essentials

It is generally believed that death is final. However, a grieving family knows only too well that the death of a loved one can trigger events that may drag on for years afterwards, especially when it comes to sorting out the estate of the deceased person. Outlined below are some suggestions that may help reduce the burden on those you leave behind.

Prepare a will.

A properly prepared will is one of the crucial elements of your estate planning. Your will should not only state how your assets are to be divided, it should also nominate an executor who will be responsible for carrying out your wishes. When preparing a will it is important you make adequate provision for your dependents, and clearly document the reasons for your decisions to help minimise the risk of your will being contested.

What about a ’living will’?

Otherwise known as an Advance Health Directive, a living will is another important tool. It enables you to give detailed instructions in relation to your health care, including decisions on any treatment you wish to receive or refuse if you are incapable of communicating those instructions.

Establish a Power of Attorney.

Whilst a will deals with your estate upon your death, Powers of Attorney are designed to deal with your affairs while you are still alive. Powers of Attorney enable you to appoint an individual to deal with your affairs if you become incapable of making your own decisions. They can be as wide-ranging or as limited as you require or desire.

Appoint a guardian for children.

If you have young children, appoint a guardian to care for them. In doing so, you can provide that guardian with guidance about your child’s upbringing, and make provisions for your children’s financial future using the most tax-effective means available.

Make binding death nominations.

It is also important that binding death benefits nominations are made on superannuation and retirement income stream products as they ensure these funds bypass an estate, and in so doing, be excluded from any claims against an estate. And make sure you keep them current.

Cover those assets not covered by your estate.

One of the most common mistakes made in estate planning is leaving no instructions for those assets not covered by your estate, such as assets held in trusts and companies. Separate provision needs to be stipulated to ensure that control of these assets passes on to those you intended.

Other estate planning mistakes to avoid include:

  • Writing an informal will and not having it witnessed – or having beneficiaries as witnesses;
  • Not reviewing or updating your will on a regular basis;
  • Not telling anyone where your will is located.

This list covers important aspects to consider, however professional advice should be sought to tailor your estate plan to your individual circumstances. Then you can get on with living your life.