How To Plan Your Estate And Leave A Legacy To Your Loved Ones

Preparing for the future isn’t just about financial stability during your lifetime; it’s also about ensuring your legacy is protected and your wishes are carried out after you’re gone. Estate planning, though often overlooked, plays a crucial role in achieving this. As expert financial planners in the Southern Highlands, we’ve written an estate planning guide to ensure your loved ones are taken care of after you’re gone.

What makes up a financially sound estate plan?

An estate plan is a comprehensive legal strategy that outlines how your assets will be managed, distributed, and protected should you either pass away or become incapacitated. Here’s a breakdown of what an estate plan typically includes:

Will: A will outlines how you wish to distribute your assets upon your passing. It allows you to specify beneficiaries, appoint guardians for minor children, and make arrangements for your funeral.

Beneficiaries: Usually identified within your will, beneficiaries are the people or organisations that will receive your assets, such as money and property, after you die. Beneficiaries can include family members, friends, charitable organisations, or other entities.

Testamentary trust: Typically incorporated within your will, a testamentary trust manages asset distribution to beneficiaries based on your specified conditions. This can provide protection and flexibility, particularly for beneficiaries who may require ongoing support or have unique needs.

Superannuation binding nominations: Binding nominations ensure that your superannuation benefits are distributed according to your wishes, providing clarity and certainty for your loved ones.

Powers of attorney: These legal documents grant authority to designated individuals to make financial and legal decisions on your behalf in the event that you become incapacitated.

Power of guardianship: This legal document designates someone to make decisions about your personal and medical care if you’re unable to do so.

Advance health care directive: Also known as a living will, this directive allows you to express your preferences for medical treatment and end-of-life care if you’re unable to communicate your wishes.

How to create a will that protects your legacy

Your will serves as the cornerstone of your estate plan, so it’s very important to get it right. Planning and preparing your will allows you to provide financial support for your loved ones, including family members, friends, or charitable organisations, after you pass away. Without a will, your estate may be distributed according to default laws, which might not align with your intentions. Not having a will also increases the risk of potential conflicts among family members regarding the distribution of assets.

Typically, your will should include information such as:

• How you would like your assets to be divided
• Who will look after your children if they are under 18 when you pass away
• Any trusts you would like set up on your behalf
• Funeral arrangements

To prepare your will, you have the option of either a solicitor or a Public Trustee. Public Trustees may waive or discount fees for pensioners or those over 60, or if they are designated as the executor.

Solicitors, although they may charge a fee, offer personalised legal advice and ensure your will meets your specific needs. A solicitor can also help establish trusts, which are valuable estate planning tools for managing asset distribution and minimising tax liabilities.

Update your will and estate plan as your circumstances change

Many people create an estate plan but forget to update things when their circumstances change. Major life events such as marriage, divorce, the birth of children or grandchildren, changes in financial status, or acquiring new assets can all impact the distribution of your estate.

Regularly reviewing and updating your estate plan helps ensure that it accurately reflects your current wishes and intentions. Failing to do so could result in unintended consequences or complications in the future. For example, if your will is outdated and does not include provisions for newly acquired assets or changes in family circumstances, it may lead to disputes or legal challenges among beneficiaries.

Consulting with a solicitor can help you update your will to reflect any changes in your life circumstances and ensure that your wishes are always kept current and legally binding. By staying proactive and revisiting your will regularly, you can ensure that it remains a reliable and effective document for guiding the distribution of your estate.

Tips for tax-efficient estate planning

In estate planning, taxes can impact how much your beneficiaries receive. While Australia currently does not have an inheritance or estate tax, the assets you pass on may have tax obligations. Strategic planning can reduce the tax burden on your loved ones and maximise the inheritance they receive.

Here are some helpful tips for tax-efficient estate planning:

• Stay informed about relevant tax laws, including any state-based duties or taxes that may apply to your estate
• Consider using trusts, which can offer tax benefits, protect your estate against creditors and provide greater control over asset distribution
• Give assets to your beneficiaries while you are still alive, which can reduce the overall value of your estate subject to taxation upon your death
• Take advantage of superannuation strategies, such as salary sacrificing, to minimise the tax impact on your estate
• Regularly review and update your estate plan to ensure it reflects changes in your financial situation, tax laws, and personal circumstances

A financial planner can help create a solid and tax-efficient estate plan

Forming a team of professionals can help plan your estate more effectively. A crucial member of any estate planning team should be an experienced financial planner. A financial advisor can:

• Assist in managing and reducing financial risk associated with your estate plan
• Develop investment strategies that align with your estate planning goals, ensuring your loved ones receive maximum benefit from your legacy
• Help you create a strategy to reduce tax liabilities associated with your estate
• Work closely with solicitors, accountants, and other professionals involved in estate planning to ensure all aspects of your plan are aligned
• Anticipate future financial needs, ensuring your estate plan remains relevant and effective over time.

If you’re looking for assistance with estate planning, Poole Advisory can help. We have over 20 years of experience assisting Australians to create a financially sound estate plan. Contact us today or schedule an appointment to discuss your current situation and we’ll develop a tailored plan to achieve your estate planning and financial goals.

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Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917