6 Estate planning tips

It is all too easy to focus on growing wealth, but often we forget about the importance of planning for the transfer of wealth if something were to happen to us. Estate planning is not just about planning for what happens to your property after you pass away, it is also about planning for what happens to you and your property if you become mentally incapacitated.  If you hold assets in other entities then those entities should also form part of the plan.  Here are few tips…


TIP 1 Prepare a Will

Passing away without a Will is known as passing away Intestate.  This may result in your estate being distributed against your wishes as well as incurring unnecessary tax liabilities.

Most people wrongly believe that their Will covers all of their assets.  This is not true and particular care needs to be taken so that non-estate assets pass to beneficiaries the way you intend.


TIP 2 Consider a Testamentary Trust

A Testamentary Trust is a trust created pursuant to your Will and it can have significant advantages.

One of the advantages is that it may enable you to distribute your estate to your beneficiaries in a more tax effective manner; this is especially the case for beneficiaries under 18 years of age.  A Testamentary Trust may also provide asset protection for beneficiaries of your estate who face legal claims such as divorce or bankruptcy.


TIP 3 Super is not part of your Will

Super is not directly held by you and cannot form part of your Will. Instead, your super balance is controlled by your super fund trustees and they have the say on how that money is dealt with.  Most people don’t realise this and the result can be the payment of too much tax.  In 1999 law was introduced whereby a member of a super fund could direct how their super balance was to be dealt with.  Whilst this sounds like a good idea it does require careful management as they expire every 3 years.


TIP 4 Grant an Enduring Power of Attorney (EPA)

Many times mental disability planning is overlooked during the estate planning process. This is a mistake as statistics show that while people are living longer, they are not necessarily living healthier. Aside from this, accidents can happen at any time that can render you incapable of making personal and financial decisions.

Granting an EPA means that you legally appoint a person to make decisions, sign documents, and act on your behalf in various matters. 


TIP 5 Consider an Enduring Power of Guardianship (EPG) and Advanced Health Directive (AHD)

An EPG is a legal document that authorises a person of your choice, to make important personal, lifestyle and treatment decisions on your behalf should you become incapable of making such decisions yourself. This person is known as an enduring guardian.  An enduring guardian could be authorised to make decisions about things such as where you live, the services you require and the treatment you receive.  The scope of authority given to your enduring guardian is determined by you.

An AHD is a legal document that enables you to make decisions now about the treatment you would want – or not want – to receive if you ever became sick or injured and were incapable of communicating your wishes. In such circumstances, your AHD would effectively become your voice.  The term ‘treatment’ includes medical, surgical treatments, including palliative care and life-sustaining measures.  An AHD would come into effect only if it applied to the treatment you required and only if you were unable to make reasoned judgements about a treatment decision at the time that the treatment was required.


TIP 6 Estate planning is not a DIY project

Preparing your own Will and estate planning documents is not advisable.  These documents must conform to strict legal requirements otherwise the Courts may decide they are not valid.

Dependent on the complexity of your affairs your estate planning may require the assistance of several experts including a tax professional, a financial advisor and an experienced estate planning lawyer.

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