Estate Planning

If someone dies without a Will, they die ‘intestate’. Being intestate means the laws of the state or territory the person lived in will decide how their estate (their assets and liabilities) is administered. This might mean your assets do not end up with the person you would have chosen.

A person’s assets include their property, investments and belongings that have value, such as a house, car, bank accounts and non-super investments. A person’s liabilities consist of any money they may owe, such as a mortgage or a loan.

Wills can be as simple or as complicated as you wish, but your family will always be better off if you have one.

A good rule of thumb is to review your estate plan every five years. However, it is important to review your will and possibly update it with each significant change in your life such as:

• Getting married or entering a defacto relationship – will you combine your assets or keep some separate?
• Buying a home – this is often your biggest asset so consider who it will be left to.
• Having children – who will you appoint as their guardian? When will they be allowed to take over their inheritance? Be aware that legally they will inherit at 18 unless otherwise specified.
• Getting divorced.

By making an enduring power of attorney, you are choosing who you want to manage your financial affairs or make medical decisions on your behalf if you lose mental capacity.  It is the only way you can have control over who will make decisions on your behalf should you are ever be unable to do so yourself.

There are three specific types of Enduring Powers of Attorney in Victoria:

1. Enduring Power of Attorney (Financial)
2. Enduring Power of Attorney (Medical Treatment)
3. Enduring Power of Guardianship.

All Powers of Attorney will cease on death and you can change them at any time if required.

Estate planning is more than just having a will.  It’s about:

• Minimising tax
• Ensuring your superannuation assets are considered in conjunction with your estate’s assets so they are distributed to your beneficiaries in the most tax efficient way.
• Ensuring ownership and control of your assets are passed on to your intended beneficiaries.
• Providing protection over your assets if the beneficiary falls into legal trouble (e.g. divorce, bankruptcy)

Anyone of your choosing can be a beneficiary of your will.

When nominating beneficiaries for superannuation, the beneficiary must be an eligible beneficiary (such as your spouse, children or other financial dependents) for the nomination to be valid.

As superannuation does not part of your Estate, you need to record a binding nomination on your super scheme.  There are two types of binding nominations namely Non-Lapsing Binding Nominations or binding nominations which may have to be renewed every three years.

Binding nominations can only be made to dependent beneficiaries (such as your spouse, children or other financial dependents) or to your estate.

Any insurance owned via your superannuation scheme will be effectively be covered by the binding nomination on your super.  The insurance proceeds will be paid to your superannuation fund and then distributed according to your nomination.  It is important to understand there can be significant tax consequences if insurance proceeds within super are received by non-dependent beneficiaries.

If you do not have a binding nomination recorded on your superannuation, the Trustee of the super fund will determine who receives your account balance and any insurance proceeds if applicable.