Estate Planning is not just for retirement
Many people think that Estate Planning is only for people who are close to retirement, especially if we fall into the trap of thinking that Estate Planning is just about getting a will. But did you know that Estate Planning addresses key protection strategies whilst you’re still alive? It doesn’t matter who you are, Estate Planning is for everyone.
What are the key pillars of Estate Planning?
Estate Planning is all about making sure that you get the choice as to what happens to you and your assets – whether that’s if you need someone to make decisions on your behalf, or you pass away and your estate needs to be divided up.
1. Advance Health Directive
Should something happen to you, and you are unable to communicate decisions about your medical care and treatment, an advance health directive allows you to:
- Give other people directions about any future health care you may need,
- Make your wishes about the type(s) of treatment you want (and don’t want) known to medical professionals and,
- Appoint someone you trust to make decisions about health care on your behalf.
As long as the directive is valid, it must be followed and cannot be overridden by medical professionals or family members.
2. Power of Attorney
A Power of Attorney allows a person who you nominate to make financial and legal decisions on your behalf if you lose capacity as a result of illness, injury or disability. You can also nominate the same (or a different) person to manage your personal matters, including health care.
They can help ensure important financial and legal matters are handled without delay if you can’t manage them yourself – for example, paying your bills, managing your bank accounts, managing your investments and buying and selling property.
3. A Valid Will
Whereas the first two pillars ensure that important matters are handled in accordance with your wishes if you’re incapacitated, a will ensures that those same matters are handled in accordance with your wishes after your death. A will gives you the best chance of ensuring that your assets go where you want them to.
If you die without a valid will:
- the public trustee will determine how your estate is to be distributed, which can take a lot of time and consultation with related parties.
- If you have a complex estate, children from different relationships, or are separated but have a new partner, this could lead to legal proceedings, infighting amongst relatives and your assets being distributed against your wishes.
When you pass away, your superannuation is distributed to the person(s) you have nominated in the fund’s death benefit nomination. However, this may not be binding on the super fund, and if you haven’t nominated a beneficiary this could result in a lengthy process as the super fund trustee needs to decide who gets the money.
Superannuation is also not automatically included as part of your estate. One good way to ensure your super is distributed in accordance with your wishes is to nominate your legal personal representative. Your Executor will then be required to distribute your super according to your Will.
An estate plan gives you choice and control
Whilst growing your wealth is one part of a great financial plan, protecting your wealth in the event of your incapacity or death is just as important. Ensuring that your estate plan is in order gives you choice and control in how your affairs and assets will be handled, which in turn benefits both you and your loved ones. If you would like to explore your estate planning options, contact us to get started.
McConachie Stedman Financial Planning is an Authorised Representative of Wealth Management Matters Pty Ltd ABN 34 612 767 807 | AFSL 491619