As we approach the end of the financial year, maybe this year, once you have organised your tax return you might then look a bit further ahead. Estate planning is an essential part of your financial wellbeing ensuring that your finances and assets are taken care of as you wish. There are three essential parts to estate planning.
Make a will
Writing a will ensures that your estate is distributed as you wish. Many Australians die without a will which then results in a court-appointed administrator using the deceased's assets to pay outstanding debts and using a formula to distribute the remaining funds. Therefore this may not be in accordance with what the deceased might have wished. If the person does not have any living relatives, the assets are given to the State.
You can make a will once you turn 18, or get married, and are of sound mind. It should be kept up to date as life circumstances change such as marriage, divorce, new children etc.
Your will should contain instructions for the division of your assets. It can also cover requests such as nominating guardians for your children and funeral wishes. You must also appoint at least one executor who will ensure your wishes are implemented.
Superannuation assets are not included in an individual's estate. For better or worse, without a Binding Death Benefit Nomination (BDBN), the fund's trustee will determine which of the member's dependants will receive the death benefit. BDBNs normally expire after three years so updating them is essential.
Power of Attorney
A power of attorney is a legal document that covers the management of your affairs while you are alive. Appointing an Enduring Power of Attorney gives them the ability to make actions on your behalf such as property and financial decisions. This responsibility will continue even if the owner loses mental or physical ability to run their own affairs however ceases once the owner dies, bringing the will into effect.