Estate planning

4 min read

Having an estate plan in place gives you control over who inherits your assets (or ’estate’) and keeps your family financially protected if you pass away.

Protect what you’ve worked hard for

You’ve worked hard for all the things you’ve built up over your lifetime. Not just your assets and investments, but the lifestyle you share with the people who matter most in your life.

Of course we tend to assume ‘it’ll never happen to me’. But the fact is people of all ages and lifestyles can become ill, injured and even pass away unexpectedly. So while estate plans are important at any life stage, they are especially important once we reach retirement and it’s not just a matter of age. When we retire, our wealth may be at its peak.

Have a valid will in place

At the heart of every estate plan lies a valid will. It states exactly who you would like your assets to go to when you pass away. Not only does this give you peace of mind, it can also protect your loved ones at a time of grief.

Without a valid will, your assets will be distributed in line with the state government formula that applies in your state/territory, known as intestacy. Your spouse is generally first in line. This is generally followed by children. Intestacy may or may not achieve your wishes, however, even if it does, an intestate estate may be more expensive and complex to administer than one with a valid will.

Bypass DIY wills

Estate laws are complex and taking a do-it-yourself approach to your will can presents many risks. This is why it makes sense to have a professionally drafted will.

Appoint an executor

Part of making a will involves appointing an executor. This is the person who is responsible for taking care of your assets and distributing them to your beneficiaries according to your will when you die.

You may choose to name an adult child as your executor, though appointing a third party such as your solicitor can ease the burden from family members.

Discuss your will with beneficiaries

While you are free to distribute your assets as you choose, it is worth discussing your will with family members. This can be a way of avoiding conflict later on. Once your will is finalised, be sure to let your family know where your will is – especially if it includes any preferences for funeral arrangements.

Review your will following major changes

Your will isn’t necessarily a set and forget document. It should be revised if your circumstances or your assets change.

For example, many of us will experience separation, divorce, remarriage and the arrival of children or grandchildren through our lifetime. These are key events that should trigger a review of your will. Similarly, if you dispose of or buy new assets, you should speak to estate planning professionals about whether or not to amend your will to reflect this.

Arranging your funeral so your kids don't have to

Funerals can be expensive and there are options to pre-pay the cost and even pre-arrange your own funeral so your children don’t have to go through the process.

The funds held in your estate such as super savings or a life insurance payout may be used to pay for funeral expenses, however, if you pre-pay for your funeral, it avoids the need to get funds released.

Pre-paid funeral plans let you pay for your funeral in advance via installments. Do check what happens if you change your mind about the plan, as you may not be able to get your money back.

What happens if something goes wrong and I get sick or injured?

Many of us don’t hesitate to insure physical assets such as our home, contents and vehicles, but we often overlook our best asset – our ability to earn an income.

Protecting your income while you are in the workforce isn’t a luxury: it may be worthwhile for anyone with financial obligations to consider a back-up plan such as income protection insurance.

It is designed to replace a percentage of your monthly income if you’re unable to work for a period of time due to sickness or injury. This can help give you some financial peace of mind that you may be able to cover your day-to-day living expenses while you focus on what’s more important: your recovery.

One thing to consider is the level of income protection cover you may already have through your employer or your super. If your employer or your super fund offers some form of income protection cover, you may still need to apply for additional income protection insurance or another type of insurance cover depending on your insurance needs and personal circumstances, so that in the unfortunate event of sickness or injury, you can protect your financial position.

Life insurance - are you fully covered?

If you have significant debts or a family, it is appropriate to consider the need for life insurance. This is designed to provide a payout, when you pass away, to the people you nominated. You may have some life insurance through your super fund, but it may not be sufficient for your family’s needs.

Generally speaking, people aim to have sufficient insurance in place so that their family can pay out any debts and still maintain the same standard of living.

If it turns out you don’t have sufficient protection, you may think about asking your super fund to top up your cover or take out a directly held policy that is suitable for your needs and personal circumstances.

Need help organising estate plans? Contact us to arrange to speak to a BT Adviser
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This information is current as at 15/08/2016.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.

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