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Top 3 effective Estate Planning tips
Estate planning isn’t everybody’s favourite topic however, this will guarantee that your loved ones are taken care of in the event of your passing. It can vary from simple to complex, depending on the assets involved or which needs are to be addressed.
To protect the wealth that you’ve built for your family, here are our top three tips on how to get estate planning right.
- Draw up a Will
This seems like an obvious tip, but surprisingly, a survey reported that around 45% of Australians do not have a Will in place.
Drawing up a Will is important as it ensures that your assets will go to the right people. When you pass away without a valid Will, your estate will be distributed according to inheritance laws and the result may be different to what you may have wished to happen.
There are necessary conditions to make a Will valid. The person making the Will must be 18 years old. The Will should be made voluntarily and the owner should understand and approve its contents and the document must be signed by the owner and two witnesses.
An executor must be nominated to distribute the assets after the person’s death.
It is a good strategy to seek help from a solicitor in drawing up a Will. This should also be done along with the advice from an accountant or financial adviser to ensure that the Will is effectively structured to prevent tax implications that may affect your beneficiaries.
Make sure that you also review and update your Will regularly, especially when your circumstances change. For example, when you acquire new assets and when you have children or grandchildren.
- Make sure to remember your super
Generally, your superannuation is not treated as an asset in your estate. Most super funds will allow you to nominate one or more beneficiaries who will be receive your super benefits when you die.
Super benefits can be paid directly to your dependents such as your spouse, children or to people who depend on you financially.
You can consult with your accountant or financial adviser to better understand the rules on superannuation death benefits.
- Add your funeral plan
It may seem morbid, but it’s practical to include a funeral plan in estate planning. Today, a funeral can range anywhere from $4,000 to $14,000. That is how much of a financial burden your family will have to deal with if you do not plan for your funeral.
Alternatively, you can invest in a funeral bond where the accumulated income can be used for your funeral expenses. The most cost-effective strategy, however, is to acquire a funeral insurance where your family or other nominated beneficiaries can receive a lump sum payout (generally, exempt from tax) after your passing.
If you have multiple assets it is best to seek professional advice when drawing up an estate plan. The advice from a legal practitioner or financial adviser, will give you peace of mind that your family and wealth are protected when you pass away.
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