Estate planning is an important aspect of managing your financial health. Having your affairs in order will help protect your assets and give you peace of mind.
Here are three things to consider when planning your estate:
Have a valid, up-to-date Will
Preparing a valid Will is first and foremost. A Will helps ensure your estate assets are distributed to the intended beneficiaries. Individuals would be wise to update their Will after major life events (i.e., marriage, divorce, new children) to reflect their circumstances. If an individual dies without a Will or without a valid Will, it is considered dying intestate. Dying intestate means the individual’s assets will be distributed according to the inheritance laws of the states and territories of Australia, which can result in higher tax liabilities for beneficiaries.
Appoint a Power of Attorney
A Power of Attorney is a legal document that allows an individual or organisation to act on your behalf. Appointing a General Power of Attorney gives the attorney wide powers to undertake actions on your behalf, such as dealing with property or paying bills. However, if the Will Maker dies or loses mental capacity a General Power of Attorney ceases. An Enduring Power of Attorney can be appointed to overcome these limitations.
Nominate death benefits for your super
Superannuation assets are not included in an individual’s estate. Where a nomination is in place, the super will be paid to the nominated beneficiaries. If a binding death nomination is not in place, the trustee may pay the benefits of the deceased to any of their superannuation dependents instead of the estate. Individuals should consider the tax implications of distributions made under a binding death nomination and regularly review nominations to ensure they are valid and effective.