You would have heard the saying: “where there’s a will, there’s a way”. This statement is usually used to encourage people who are losing enthusiasm for a task or goal. But it also reflects the way many people feel about estate planning. They think that so long as you have a Will, you have a way to ensure your wealth is passed correctly to your loved ones. But this is not necessarily the case.
The truth about Wills
A Will can help ensure the assets that form part of your estate get distributed according to your wishes.
But did you know that a Will typically only applies to personally held assets and therefore may not deal with a significant portion of your wealth? For example, the proceeds from your superannuation funds and life insurance policies don’t necessarily form part of your Estate. They can pass directly to certain beneficiaries nominated by you or go to your Estate where they’ll be dealt with by your Will.
Also, some assets never form part of an estate, like jointly owned assets, assets held in a discretionary family trust, superannuation benefits or life insurance proceeds.
To cover all bases, thorough estate planning (or personal succession planning as it’s also known) involves putting in place strategies that address all your assets, not just those covered by your Will.
Do I need a personal succession plan?
Another common misconception is that personal succession is only for the wealthy or the elderly. However, just about every asset you own and every investment you make has estate planning implications. As a result, personal succession planning is something everyone needs to consider, regardless of age or stage in life.
At a minimum, every individual should have:
- a current Will to distribute estate assets
- an Enduring Power of Attorney to cover situations where they’re unable to make financial decisions themselves, and
- appropriate estate planning arrangements to distribute specific assets that are not covered by the Will.
What are the benefits of personal succession planning?
Personal succession planning can:
- provide certainty by getting the right assets in the hands of the right people, at the right time, and
- enable you to provide for your loved ones while minimising tax payable by your nominated beneficiaries.
What are the consequences of NOT having a personal succession plan?
Personal succession is something you should address now. Don’t wait until it’s too late.
If you die without a valid Will, intestacy legislation will determine how your estate assets are distributed among your surviving family members.
If you die without a valid superannuation or life insurance death benefit nomination, the proceeds may not be distributed according to your wishes.
And if you’re badly injured in an accident or lose mental capacity, who will manage your affairs while you’re still alive but unable to make your own decisions?
Who should I contact to discuss my personal circumstances?
You should consider holding an initial discussion with a qualified financial adviser. With assistance from your financial adviser and, where appropriate, legal and tax professionals, you can:
- Ensure you’re making the right ownership decisions when acquiring new assets or re-structuring your existing assets. For example, your financial adviser can help you determine whether it’s best to invest in your name, your partner’s name, or jointly with your partner. Your adviser may also identify whether further tax and legal advice is required to consider another arrangement such as a trust or company.
- Determine if you have sufficient means to achieve your estate planning objectives. Additional life insurance inside or outside of superannuation may be necessary to provide your family with a lump sum payment or an income stream to repay debts, meet their ongoing living expenses and cover your children’s future education costs upon your death.
- Develop a range of strategies to provide certainty, tax efficiency and/or asset protection. For example, your financial adviser can explain superannuation death benefit and life insurance beneficiary nomination options. By making appropriate nominations now, your beneficiaries will be able to effectively and efficiently receive the death benefit when you’re no longer around.
If you would like to get your estate planning affairs in order or to discuss options available to you and/or your loved ones, please contact Calibre Private Wealth Advisers at your earliest opportunity.
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.