Planning your estate is one of the most important things you can do for your family, and it’s not as complicated as you may think.
I have children. I have elderly parents. I have savings. I own my home. One or more of these statements are likely to apply to you and if they do you have to think about estate planning.
You’d be forgiven for thinking estate planning is for high net-worth individuals who own estates but creating a Will is perhaps one of the most important things you can do irrespective of the value of your assets. In fact, over half of Australians do not have a Will and this can leave their loved ones vulnerable to costly probate and legal battles.
The importance of estate planning cannot be understated. As morbid as it may sound, estate planning can be one of the best things you do for your loved ones as it provides peace of mind and minimises stress at a time when their grief is most acute. Without a Will your assets may not be distributed according to your wishes. Beneficiaries may not receive the full entitlements you bestowed, funeral arrangements can be hampered by financial difficulties and if you die intestate your assets will be paid to the state government.
Estate planning is especially important for families with businesses to ensure ownership passes on at the right time, through a succession plan, for appointing guardians of young children and is also crucial in minimising the impact of taxes on the transfer of your assets.
A vital consideration for the estate planning process is the appointment of a power of attorney. Where a Will manages the distribution of your assets upon your passing, a power of attorney manages your assets whilst you are alive in the event of accident or loss of mental capacity. Aside from a Will one way to avoid your loved ones entering probate is to have up-to-date death benefit nominations for superannuation and designated beneficiaries for assets such as life insurance. There are many legal aspects to estate planning, despite the rather financial nature of the question, so it is vital a solicitor who specialises in estates is engaged when entering the estate planning process.
What of the experience of our loved ones when we pass, as a direct result of our lack of estate planning? Simply, they end up in probate court which aside from being expensive—almost 75% of probate costs are legal fees—and time-consuming, can be incredibly emotionally draining and galling for our loved ones. There are many cases of adult children feeling unable to mourn their parents during probate and in some extreme cases probate can take years to resolve.
The horror stories of what happens when estates are not properly planned are many. Some are high-profile such as the battle between Robert Newbold and his step-father over his mother’s estate after she passed without a Will, but most are contained within the family sphere causing consternation and often bitterness between those closest to the deceased. Proper estate planning keeps things in order, beneficiaries are awarded their inheritance without squabble or rancour and the legacy of the deceased is not one that fractured a family or caused heartache and stress over money.
No-one wants to think about what happens when they die whilst they’re still busy living life and it can seem like a great hassle but with new estate planning tools and independent advice it can be a rather painless process. In many ways it can help us appreciate life and value those closest to us more as we examine our relationships to ensure the security of our friends and family. Planning what happens to your assets, financial and sentimental, when you pass and what instructions you leave for your legal and medical preferences if you lose the ability to make those decisions for yourself is the best way to provide for your loved ones but more so protect your legacy from probate.
First published in The CEO Magazine