Estate Planning in Australia

Estate Planning in Australia

Estate Planning is the process of making decisions about how your affairs will be managed after your death or incapacitation. Your Estate consists of assets, liabilities, and personal property registered in your name. 

An estate plan specifies who will oversee your affairs and how and when your assets will be divided. For example, it might contain a will, a testamentary trust, an Enduring Power of Attorney, documents concerning life insurance policies, superannuation policies or designations for death benefits. Estate planning also includes consideration regarding how to reduce your tax liability. 

Difference between writing a will and estate planning 

An independent document, known as a will, specifies how your assets will be dispersed after your death. Estate planning is more about the broad picture. It has safeguards that govern what happens if you get sick, lose capacity, or pass away, one of the primary differences. Estate planning also organises managing assets not protected by a will, such as retirement funds and life insurance.

An Estate Plan includes: 

Estate Planning- wills, AHD, EPOA, Probate, Trusts
  • A Will 
  • Testamentary Trusts 
  • Powers of Attorney 
  • Guardianship decisions 
  • Advance Health Directives 
  • Life Insurance 
  • Superannuation death benefit nominations 
  • Burial arrangements 

What are the steps included in Estate Planning ? 

Creating an Estate Plan can be more complicated and time-consuming than making a Will because it considers more than just your assets and liabilities. In addition, estate planning includes telling your loved ones how you wish to be cared for if you become mentally incompetent. Another option to ease the strain on your family throughout the grieving process is to create your estate plan. The following may be helpful as you begin thinking about your estate planning:  

1. Create an inventory of all your assets and liabilities 

Make a list of everything you own in your name, then give the Estate value. The checklist ought to contain: 

  • Savings accounts or debts 
  • Shares or bonds 
  • Businesses 
  • Properties 
  • Vehicles 
  • Collectibles 
  • Valuable possessions or items with sentimental value 
  • Life insurance policies 
  • Superannuation savings 
  • Digital assets, such as cryptocurrency  

2. Protect yourself and your family 

What to do if you cannot make decisions while you are still alive is spelled out in a comprehensive estate plan. Assigning duty to someone you can trust will help you protect your family and your interests. 

  • Making an Advance Health Directive and Enduring Power of Attorney will give your family specific instructions on handling your medical or financial requirements if you become incapacitated. 
  • Your children or pets will be cared for by the appropriate persons after your death if you appoint a Guardian. 
  • Life insurance can add an extra layer of security when planning your affairs. For example, this can cover debts in a decedent’s Estate or reduce capital gains tax obligations. 

3. Protect your assets 

Estate Planning is not complete without drafting a Will and other legal documents. It’s time to select how you want to keep your assets safe now that you have an inventory of everything you own. You can accomplish this by writing a Will or establishing a Testamentary Trust. For the benefit of your Beneficiaries, a testamentary trust can also be an approach to reduce the asset’s taxes. Potential capital gains taxes levied on assets sold after your death may be lessened. We recommend you speak to your accountant about what safeguards you can put in place to help reduce taxes.  

4. Choose an Executor 

This person will carry out your final wishes after you die. An Executor should be someone you trust who has some financial knowledge as they will be responsible for paying off debts and managing your Estate according to the terms set out in your Will. An Executor can be a family member, close friend, lawyer, Public Trustee, or another corporate provider. 

5. Review your beneficiaries 

Likely, you have already chosen your Beneficiaries if you have a will. However, not all intangible assets registered in your name pass to the heirs listed in your Will. The beneficiaries of your life insurance or superannuation money must be listed separately with each provider because they are not related to your Will. This may have been something you did when you initially set up your policy, so as part of the estate planning process, it should be evaluated and updated. 

6. Regularly review your Plan 

Any effective estate plan should be frequently examined and revised. Make sure the correct individuals will be protected when you pass away by reviewing your estate plan after significant life events like marriage, divorce, or death. 

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