What is an estate plan?
And why you need one
When you think of making an estate plan, what’s the first thing you think of? A will?
Having an estate plan is SO MUCH MORE than having a will.
An estate plan is your chance to tell your life’s story. You have worked hard during your lifetime. Your estate plan is your chance to make your hard work mean something, and to leave a lasting legacy for the people and causes you care about.
It’s important to remember that even if you don’t have a will – you still have an estate plan. Your government has very generously given you one! My research reveals that 9/10 times, a person would much prefer to have their own custom estate plan (i.e. a will) rather than the “off the shelf” estate plan you automatically receive under the government’s intestacy laws.
WHAT IS A CUSTOM ESTATE PLAN?
A custom estate plan will usually be comprised of some combination of these documents (at least):
Will – this is a legal document which applies after you have died. In the simplest of terms, this document nominates who will manage your finances, where (some of) your assets will go, and who will look after any minor children
Enduring power of attorney for financial matters – this is a legal document which applies while you are still alive. It stops applying when you die. This document allows you to nominate who can manage your finances on your behalf while you are still alive
Enduring power of attorney for medical and lifestyle decisions – this is a legal document which applies while you are still alive. It stops applying when you die. This document allows you to nominate who can make medical and lifestyle decisions for you if you lose capacity to make them for yourself
Nominations for life insurance – your life insurance is not automatically covered by your will. Often a specific nomination will be needed to specify who will receive your life insurance after you die
Nominations for superannuation – your superannuation is not automatically covered by your will. Often a specific nomination will be needed to specify who will receive your superannuation benefits after you die
Letter of wishes – this is a morally binding document which allows you to leave guidance to your financial controllers and family about what you want to happen after you die, using your own words. It is not legally enforceable but can be incredibly valuable for providing the roadmap to tidying up your affairs and letting your loved ones understand your intentions beyond the legal jargon of a will
Testamentary Trust – ‘lawyer speak’ for a trust set up in a will that starts when you die. If you want to leave an inheritance to your loved ones in an environment that offers protection from relationship breakdowns and bankruptcy exposure, you need to consider a testamentary trust. They also offer fantastic tax planning benefits, especially when there are minors who could benefit from the inheritance. The testamentary trust must be included in your will before you die.
It’s important to get the detail for your custom estate plan right, and you need to engage an appropriately qualified professional to help you. I cannot emphasise this enough! Please do not DIY your estate plan – often a DIY estate plan ends up with even worse outcomes than relying on the government’s automatic estate plan.
DO YOU NEED A CUSTOM ESTATE PLAN?
Still not sure if you need a custom estate plan? If you’re thinking:
I don’t own anything so I don’t need a will ->If you have a job, you have superannuation and life insurance and you DO own something (at least after you’re dead!)
I’ll be dead so it doesn’t matter –> What about if you are still alive and lose capacity? Don’t you want to choose who will make your medical and financial decisions (especially because you could recover and have to live with the consequences of those decisions!). And if you do die, do you really want your legacy for your loved ones to be a stressful mess that they have to sort out?
I have life insurance, it will all be fine -> You still need to make sure the life insurance ends up with the right people!
If you tick any one of these boxes, you need a custom estate plan:
You need a custom estate plan if….
You are a human being who is over 18 and will die one day
You have a job
There are people or causes you care about
You live in a country with laws about tax and dying
Our firm now offers EPOA’s and Wills through our partnership with Lawyers and specialist estate planning advisers to provide you and your family with these important solutions. Contact us ASAP so we can help you tick this off the list and sleep better at night.
The above comments are guidance only, and the legal strategy should always be approved by a qualified lawyer