It was also a solemn reminder of the importance of ensuring your affairs are in order, so your wishes are met – in life and death.
The centrepiece of any estate planning is your Will, which sets out who you would like to receive your assets when you die, and how they are to be distributed. But you also need to consider what will happen to your superannuation as well as who will act on your behalf if you are unable to make decisions about your finances, health or wellbeing.
Learn more about estate planning.
Expressing your Will
Despite the importance of a Will, it’s estimated that nearly half of Australians don’t have one (i). If you die intestate (without a Will), your assets will be distributed according to a legal formula within each State, which may not be in line with your wishes. In an era where complex family situations and blended families are common, this can create unnecessary conflict at what is already a difficult time.
Even if you have a Will, it’s not a set-and-forget document. You must make sure it is up to date and reflects major changes in your life. Some reasons for changing your Will include,
- The birth of a child/your child grows up
- The purchase of a home
- Starting a business
- Your assets increase substantially
- You dispose of assets mentioned in your Will
- A beneficiary or executor dies
Moreover, your Will is automatically revoked in most states if you marry (or remarry), destroy the original copy, write something on the Will so that its clear you intend to cancel it or make a new valid Will. After a divorce, it is important to get legal advice about the status of any existing Will.
Learn more about Wills.
Super is not part of your Will
Super is the second-largest asset for most Australians, after their family home. To give your certainty that your superannuation benefits will go to the right people after you die, you can put a binding nomination in place.
It is not widely understood that superannuation is not covered by your Will unless you specifically direct it to be by nominating a legal personal representative (LPR) as your beneficiary.
Unless you nominate a valid beneficiary, the fund’s trustees will determine who receives your super. Even if you don’t have much money in super yet, chances are you have life insurance with your super which is paid out to your beneficiaries on your death.
To be valid, a beneficiary must be your LPR or a dependent, defined under super legislation as your spouse, child, someone in an interdependency relationship with you or a financial dependent. If you don’t nominate anyone, or your nomination is not valid, generally the money will go to your dependants or your LPR – but it’s always good to make sure.
The best way to ensure your super and any insurance payout ends up with the people you want to receive it is to make a binding death benefit nomination. There may be a small charge and you need to renew it every three years to remain valid. A non-binding nomination is only a guide so the trustees can overrule your nomination.
It is also worth remembering that if your beneficiaries are adult children, there may be tax implications for them.
Learn more about nominating beneficiaries for your super.
Estate planning isn’t just about planning who gets what when you are gone. You should also consider putting in place directives to let your family and others know how you want to see out your days.
An enduring power of attorney will allow you to nominate somebody to act on your behalf if you are no longer capable of conducting your own financial matters. A general power of attorney is not sufficient as it is usually for a set period and becomes invalid once you can no longer make your own decisions.
You should also organise enduring guardianship to appoint somebody to take control of any lifestyle or medical issues should you become incapacitated. And it is worthwhile introducing an advance care directive that states exactly what medical treatment you do and don’t want to receive towards the end of your life.
Learn more about the Power of Attorney.
Read our latest article on ‘how to start the conversation about aged care with your loved ones.
Spread the word
Once you have prepared an estate plan, it’s a good idea to gather all your documentation in one place and tell your family and legal representative where they are. Also, consider giving someone you trust your online passwords to avoid complications down the track.
Getting your affairs in order can provide great peace of mind for you and your family, now and in the future and we are here to assist. Contact us today.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.