How to prepare for your family’s future
At first thought, it may seem counterintuitive to plan for your death in the prime of your life. But thinking about a positive plan for your family’s future can help you more readily decide what will happen to your estate when you can no longer look after it – whether that’s due to illness, incapacity or untimely demise. Additionally, if you’re planning to move to a retirement community, you may need to provide information related to your plan.
An estate plan gives your family directions on how you want your assets distributed after your death and how you want to be cared for medically and financially if you can no longer make those decisions for yourself.
You must be mentally competent when you draw up the legal agreements in your estate plan, which might include key documents such as:
Will
Did you know around 50% of Australian’s die without a valid will or intestate, which ultimately means they have no say in how their assets are divided amongst their heirs? You can buy simple will kits online or you can ask a solicitor to review your will to make sure everything is in order. If a will isn’t signed and witnessed properly, it will be invalid. If you have no living heirs and no will, all your assets will be given to your state government.
Superannuation death nominations
Most people don’t realise that the beneficiaries they name in their superannuation policies override anyone mentioned in their will – so it’s important to make sure they’re up-to-date as your situation changes.
Testamentary trust
Generally set up to protect your assets, these take effect only after your death. They’re usually used for those with heirs who are minors or mentally deficient, or if you don’t trust your beneficiaries to use their inheritance wisely. In any case, testamentary trusts allow you to appoint a trustee to look after your assets until the trust expires – say, when a minor reaches a certain age.
Powers of attorney
Appointing someone you trust with powers of attorney means you give them legal authority to look after your affairs on your behalf. There are a number of different kinds: general non enduring is mostly used for a specific purpose and a fixed period of time. It is not enduring; enduring powerscan be used to plan for the future. ‘Enduring’ means the power continues (endures) even when a person can’t make decisions for themselves due to accident or illness (either temporary or permanent); medical (another makes medical decisions for you if you’re incapacitated to do so).
Anticipatory direction
Similar to medical power of attorney, this records your wishes about medical treatment, in case you become unable to express those wishes in the future.
The documents you choose to draw up will, of course, depend on your individual circumstances and the kinds of responsibilities you’re happy to entrust to others.
Nevertheless, it’s always best to consult a legal professional to thoroughly check over your estate plan to ensure it’s legally binding, valid, minimises the tax your heirs pay and reduces the possibility of arguments between them.
Also, many states have different requirements for wills and powers of attorney, so always check with your local Public Trustees for the fine print on what you can and cannot legally do.
And remember, a good estate plan can help make sure your exact wishes are carried out after you die – in fact, it may be the last, most thoughtful gift to help set up your loved ones for the future.