Estate planning is about much more than preparing a Will

Thorough estate planning involves putting in place strategies that address all aspects of your situation. Often, we assume this simply involves making it clear in a Will who we would like to inherit assets if we pass away. However, while a Will can help ensure your estate is distributed according to your wishes, it may not be effective in dealing with a significant portion of your wealth.

For example, the proceeds from superannuation funds and life insurance policies don’t automatically form part of your estate, which means that addressing these investments in your Will may be ineffective unless you take some important additional steps.

A well-prepared and executed estate plan can ensure the right assets go to the right people at the right time, in an efficient and tax-effective manner. It can also ensure that if you’re unable to make important financial and lifestyle decisions for yourself, the right person is able to step in on your behalf.

In this guide, we outline the key tools and strategies you could use to achieve your estate planning objectives. But before you take any action, you should speak to your financial adviser. You and your adviser can then work with appropriate legal and taxation professionals (where necessary) to implement the strategies that best meet your needs.

Understand implications for different assets

Before you start planning your estate, it’s important to understand the way different assets are treated and the options available to you.

Making sure your assets go to the right people after you pass away is not always as simple as stating your wishes in your Will. How your property is distributed may depend on several factors, including:

  • whether you owned an asset individually or jointly
  • the legal structure of ownership, if an asset is owned by more than one person
  • the terms of your Will, and
  • State or Territory based legislation.

An asset you own individually (or your ownership interest in an asset that you own with someone else) will be categorised as either an ‘estate asset’ or a ‘non-estate asset’. This will play an important part in determining how the asset is dealt with when you pass away.

Estate assets

Estate assets will automatically form part of your estate when you pass away. This means they can be passed on according to your wishes via your Will. Key examples of estate assets include:

  • individually owned bank accounts, term deposits, listed securities and managed funds
  • interests in a private company or unit trust, and
  • ownership interests in any assets owned via a ‘tenants in common’ arrangement.

A tenants in common arrangement is where each owner has a distinct legal share of the asset. Ownership may be 50:50 or the shares may be unequal, but each party may deal with their share as they wish. Upon death, your share will not automatically pass to the surviving owners.

Non-estate assets

There are a range of assets that won’t automatically form part of your estate when you die that are generally known as ‘non-estate assets’. However, some non-estate assets may be distributed according to the terms in your Will if very specific arrangements are made.

It’s important you understand what will happen to non-estate assets when you pass away and the arrangements you may be able to make to ensure they are passed on to the people you wish. Key examples of non-estate assets include:

  • assets owned in a ‘joint tenancy’ arrangement, such as a jointly owned home or bank account, where ownership automatically passes to the surviving owner, regardless of the terms of any Will
  • assets held in a discretionary family trust of which you are a trustee or beneficiary, which will remain in the trust when you pass away
  • money held in superannuation (in the accumulation or pension phase), which can be paid to certain eligible dependents or your estate and you can influence where it goes by completing a valid death benefit nomination
  • proceeds from life insurance held outside superannuation, which can be paid to the policy owner, a named beneficiary or the estate depending on how the policy is established.

Deciding whether to direct super and life insurance proceeds to your estate or not, will depend on your specific situation and estate planning objectives. For example, you may want the money to go to your estate, so it can flow to a testamentary trust, which could help to protect assets and provide tax planning opportunities. Alternatively, if you are concerned your estate could be challenged, deciding for the money to be paid directly to eligible beneficiaries can ensure it doesn’t form part of the pool of assets which could be contested.

Seek advice

Calibre Private Wealth Advisers, in conjunction with our hand-picked professional network of taxation, legal and estate planning professionals, can help you assess the estate planning implications for each asset and investment you own and assist you to make suitable arrangements. We can also help you in ensuring that any future investments you make are structured in a way that is consistent with your estate planning preferences and objectives.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax/or legal advice prior to acting on this information. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. The material contained in this document is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the Oreana Group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Gordon Thoms and David Conte of Calibre Private Wealth Advisers are Authorised Representatives of Oreana Financial Services Limited ABN 91 607 515 122, an Australian Financial Services Licensee, Registered office at Level 7, 484 St Kilda Road, Melbourne, VIC 3004. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.

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