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Estate planning is a subject that we don’t like to think about but put simply, it’s about ensuring peace of mind and making sure that your assets are passed on to your family or beneficiaries in the most effective way.

Estate planning protects your assets, and your family or loved ones who inherit your assets. During an emotionally difficult time, this planning makes the process of managing your assets after your death as easy as possible; arranging your affairs to make sure there is an efficient and tax-effective distribution of your estate.

Estate planning makes sure your wishes are recorded and that your assets are properly distributed when you die or become unable to make financial decisions. It is typically carried out with the help of a financial planner and lawyer. It will include:

  • naming your beneficiaries – you will be able to name all of the people you want to receive your assets and the wishes in your estate plan will be legally binding.
  • a minimisation of taxes – your estate plan can be structured so that as little as possible of your estate is lost to taxes.
  • putting all of your affairs in order – estate planning will give you the peace of mind that you have recorded all of your wishes and laid plans for those wishes to be carried out. This ensures that your family doesn’t have to deal with expensive administration processes.
  • a Will – part of your estate plan will include you writing or updating your Will to include your current beneficiaries, assets and wishes.
  • Power of attorney – you may also need to assign power of attorney, giving the person you name the authority to manage your financial affairs when you become unable to do so yourself.
  • a Living Will – which details your wishes for the types of life-sustaining medical intervention you want or don’t want, so that your wishes can be carried out if you are terminally ill or unable to communicate.
  • a healthcare proxy – this authorises the person named to make medical decisions on your behalf.
  • a trust – depending on your situation and your assets, a trust may also be included in your estate plan.

 

Benefits of estate planning

There are several benefits of putting in a little organisational effort now, for the future benefit of your family.

Have control over how your assets are distributed

Without an estate plan, the state will decide for you how your assets are distributed, and may not take into account your wishes, family situations or current circumstances.

Reduce probate fees and taxes

The right estate planning can help ensure the largest possible portion of your estate goes to your family or loved ones. You’ll help the executor of your estate carry out your wishes quickly and easily, reducing the involvement of the court.

Leaving assets to your spouse

In most cases, you can leave an unlimited amount of money to your spouse, and it won’t be taxed.

Gifting assets

Reduce your estate taxes by gifting assets to your beneficiaries, to a charity or into a trust. Gifting reduces the value of your estate, as the gifted assets are no longer included in the value of your estate for tax purposes. There are limits to how much can be gifted before Centrelink entitlements are affected. Details can be found here.

Protection against lawsuits and divorce

If you have accumulated wealth and assets, you will have a healthy wariness about losing that wealth in a lawsuit. However, you can set up an advanced trust which protects the assets owned by the trust against lawsuits and divorce decrees.

You can benefit even if you’re not rich

Estate planning reduces taxes, litigation and other unnecessary expenses and processes, at an already difficult time. Whatever you leave behind, thorough estate planning will ensure that your beneficiaries receive the greatest possible portion of that estate.

 

How is super treated on death?

When you pass away, your super plus any life insurance payment you are entitled to make up your super death benefit. The trustee will pay your super death benefit to your dependents or legal representative (the executor of your Will or the administrator of your estate).

The tax treatment of a super death benefit depends on whether the person receiving the benefit is a dependent or non-dependent of the deceased person, or if the benefit is received as a lump sum or income stream.  More details can be found on the ATO website.

 

Creating an estate plan

It’s never too early to start the estate planning process. Ask yourself the following questions to get started:

  • What does your estate include? This could include your investments, super and retirement accounts, insurance policies, real estate and business interests, as well as items with financial or emotional value such as jewellery, vehicles or collections.
  • Where do you want your assets to go? Note who you want to bequeath each asset to and why. Discuss your estate plans with your family and friends and make your intentions clear, so there will be less chance of disagreements after you’ve gone.
  • Who will help you carry out your estate? You will need to choose people you trust, such as a Trustee, Executor and Administrator.

 

Start estate planning now by speaking to a Vision Super financial planner

Your Vision Super financial planner can assess your circumstance and implement the right estate planning strategy for you. For more information or to arrange an appointment, please contact our Member Services team.

 

Key definitions

A Will - is the most basic of estate planning strategies. A professionally drafted Will should ensure your estate is distributed to your beneficiaries in accordance with your wishes.

An Executor - is responsible for making sure that the instructions in your Will are carried out. Your executor should be someone you trust and who is willing to take on the work and responsibility.

A Trustee - holds the legal title to a property, trust or estate, and manages the assets within it. You can be the trustee or co-trustee of your estate, but will also need to name another person who can carry out the management of your estate when you are no longer able to.

Administrator - if you were to die without a Will, an administrator would be appointed by the probate court to manage your estate.

Beneficiary - Also known as a guarantee, or heir, this is the person or the legal entity who has an interest in the assets of your estate, and who you bequeath your estate to.

Power of Attorney - a formal instrument by which one person empowers another person to represent them or to act in their stead for certain purposes.

 

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