Estate planning – more than just a Will

JobMaker Hiring Credit Scheme
March 1, 2021
Partnering with you
March 1, 2021

Estate planning – more than just a Will

Many of us spend a lot of time planning for retirement then making our savings last but few put the same amount of effort planning for what happens when we die. That’s understandable, none of us likes to ponder our own mortality, however estate planning should be an integral part of your overall financial plan.

Good estate planning is a way of caring for your loved ones even after you pass, and ensures that your assets go where you want them to. It can also lessen the burden on your heirs when administering your estate and may even reduce taxes and costs.

Estate planning doesn’t mean simply creating a Will. Below are some of the things that often get overlooked on an estate planning to-do list.

Instructions for your super fund on how you want death benefit distributed

Unlike your home, car and money held in savings accounts, the money held in your super fund does not form part of your estate when you pass. That means super monies cannot be passed on to your heirs in your Will.

Instead, super funds must follow super and tax laws to decide who’s eligible to receive your money. Without suitable planning, the trustee of your super fund has discretion on which beneficiaries may inherit your super.

But with a little planning you can ensure your super monies are paid how you want when you die. By making a valid binding benefit nomination, your super fund will pay your savings to the people you nominate, in the percentages you choose. Providing the nomination is valid (there are a series of rules about validity, including how the nomination should be written, signed and dated), the trustee of your super fund must follow your instructions.

A second way to control who inherits your super after you pass is with a reversionary pension. This is an estate planning option available to people who receive, or are about to receive, a pension from their super fund. Simply put, it is an instruction to the trustee to keep paying your super to someone else after your gone, usually your spouse. Where it can get complicated is the interplay with the
$1.6 million cap on the amount of super that can transferred to retirement phase, when earnings become tax free. Inherited super can put your beneficiaries over the limit, forcing them to hastily rearrange their affairs.

Alternatively, you may bequeath your super to your estate to be distributed as you please in accordance with your Will. However, if you intend to leave your super to your adult children, there may be serious tax consequences for them.

Remember, superannuation is complex but even more so when combined with the nuances of estate planning and Wills. That’s where we can help – our professional advisers can review the structure of your estate and how your wealth, including super, will be transferred to family members in accordance with your wishes.

Establishing a testamentary trust to look after your assets after your pass

Your estate planning might include setting up a testamentary trust.

A testamentary trust is a trust that is written in your Will. It takes effect when you die, and it’s administered by a trustee, who you usually name in your Will.

The trustee looks after your assets until your beneficiaries can get them. This is set out in your Will and is either when

  • a child reaches a certain age, or
  • a beneficiary achieves a specific goal (for example, they get married or earn a particular qualification).

It can also protect beneficiaries that might not be capable of making good financial decisions and stop your assets being caught up in a divorce or a bankruptcy among your beneficiaries.

Establishing a testamentary trust is not difficult but it’s best done with professional advice. Again, our professional advisors can help.

Instructions for how you want to be cared for medically and financially

An estate plan also covers how you want to be cared for, both medically and financially, if you can no longer make your own decisions. This part of your estate plan may be in documents such as:

  • A power of attorney, remembering that there are three different types of power of attorney – general, enduring and medical.
  • A power of guardianship, giving someone the right to choose where you live and to make decisions about your medical care.
  • An advanced care directive, recording your preferences for future medical treatment should you not be able to communicate or make your own decisions (for more information, click on Making your future health care wishes known).

The documents you choose will depend on your situation and what you’re comfortable to trust others with. You should get legal advice if you’re not sure but Strategic Wealth Services is here to help. We can ensure that estate planning documents such as powers of attorney and your Will are updated in line with your wishes.

A good estate plan will make sure your wishes are carried out when you die. It can also help if you become unable to make your own decisions. We can give you peace of mind knowing that your wealth will be properly managed. To discuss your estate planning needs, give us a call on
03 9896 5100.