Planning Process / Estate Planning & Wills
Estate Planning and Wills
There are some essential elements to any financial plan outside of just making investments.
An essential part of Estate Planning is to ensure that in the event of your, death the assets from your estate are distributed in accordance with your wishes.
Wills
A Will enables the person making the will to express their wishes as to how they would like their assets distributed on their death. When making a Will you are unable to include any joint assets, such as your family home and bank accounts. The survivor is automatically entitled to the asset.
It is important that you update your Will on a regular basis or whenever circumstances change.
Superannuation
The proceeds of superannnation do not generally form part of one's estate. This is because the contributions are held by the trustee of the fund and are distributed in accordance with the terms of the fund's trust deed. It is quite common for a superannuation holder to complete a nomination or beneficiary form, although the trustee does not have to comply with this form they usually follow the persons wishes.
Guardian
If you have children under the age of 18 years, you may wish to appoint a guardian or guardians to look after them should you both pass-away at the same time. You can place a clause appointing a guardian in your will, but this is always subject to the overriding discretion of the court to make its own appointment of the person or persons it considers to be most suitable for the rearing of the child. Although this may seem harsh it is the courts view that the child's welfare is paramount.
Testamentary Trust
A Testamentary Trust is an amendment to your Will, which results in your assets being administered as an ongoing estate, that is the income distributed to your dependent. The main advantage is that children can benefit from the general exemption from income tax, whilst still being under the age of 18 years. Without this type of arrangement should you die before your children reach the age of 18 years, any income directed to them would attract a penalty rate of tax once it exceeds the per annum threshold.
If you have children under the age of 18 years it is recommended you discuss the use of this type of trust with a solicitor.
Executor
An executor is the person who looks after your personal affairs on your death. The executor is often referred to as ones legal personal representative.
An executor should be honest and someone likely to survive you and be alive when the most junior residuary beneficiary becomes entitled. In addition, it may be advisable to appoint either a joint executor or an alternative executor in case of the death of the principal executor.
Power of Attorney
Where a Will handles your affairs when you die a Power of Attorney handles your affairs while you are still alive.
It is recommended that you seek legal advice prior to entering such an arrangement.
It is important that you are aware that a Power of Attorney has limitations.
The majority of Power of Attorneys cease when an individual becomes mentally incapable. An Enduring Power of Attorney can continue to attend to ones affairs when a person becomes mentally incapable.
An Enduring Power of Attorney can be created by completing a document, which stipulates the donor (the person completing the form) must be of sound mind and needs to make a declaration that the power will continue if he or she becomes mental incapable.
If you do not have any association with a solicitor we would be happy to provide you with a referral.
