Estate Planning 101: The Top Dos and Don’ts

It’s important to have an estate plan. While it can be daunting to think about, if you do not plan your estate, many things could go wrong with your assets, including additional taxes.

You want to make sure the assets you’ve worked so hard to accumulate during your lifetime go to the people or organisations you truly care about. Additionally, you want to make sure the process for transitioning these assets is simple, stress-free and in the best interests of your beneficiaries. 

Estate planning can be a complex process, but you can make it easier with the support of capable, experienced financial planning professionals. 

Why is it Important to Have an Estate Plan?

Having a comprehensive estate plan in place can help you feel more confident about the future of your loved ones and your assets. 

A good estate plan can help you to:

• Ensure all your assets will be distributed according to your wishes
• Provide support and financial stability for your partner and family
• Minimise taxes and unnecessary expenses
• Minimise family disputes over asset distribution and decisions that need to be made in the event you became incapacitated or pass away
• Create a legacy you can be proud of by preserving assets for future generations

Your estate plan specifies how your affairs will be handled when you die or become incapacitated. Your estate includes your finances, properties, personal items, and other assets and liabilities.

An estate plan outlines who will manage your assets, when they will be managed, and how they will be managed. It includes a Will, a Testamentary Trust, a Power of Attorney, and nominations for life insurance, superannuation, and death benefits.

The Do’s

• Consider your goals within your estate plan. 
• Have a will and ensure it is legally binding and up-to-date.
• Think carefully about your executor (and trustee of your testamentary trust/s)
• Update your asset and liability list.
• Communicate with your family, your loved ones and your beneficiaries about your plans and desires. 
• Engage with a financial adviser to plan the financial aspects of your estate and help you make decisions about minimising tax.

The Don’ts

• Don’t put it off.
• DIY the process.
• Force your family to sell their belongings in order to survive; doing so will just add to their anguish.

What’s Involved in Creating an Estate Plan?

Estate planning is a far more difficult process than simply just having a will. It’s important to take into consideration your goals, your family’s circumstances, the size of your estate and the tax implications of your decisions. 

Here’s how the estate planning process works.

1: Determine your Estate Planning Goals

The first thing to consider with your estate plan is your goals for the plan. What do you hope your estate plan to do in the event you pass away?

• Do any of your family members need extra financial protection or support? Do any of your family members have special needs?
• Are you concerned about whether your heirs will protect or preserve your wealth/assets?
• Are you concerned about trying to protect assets from mixed family structures or certain individuals (ie. a divorced spouse or step-family members)?
• Are there any children or underage individuals you want to include as beneficiaries? Is the timing of wealth transfer a concern?
• Do you need succession planning for a family business?

2: Evaluate your Estate and Assets 

Your estate includes your finances, properties, personal items, and other assets and liabilities. It also encompasses unique assets which you may not have considered including life insurance policies, your superannuation, certain annuities, certain trusts and joint accounts. 

Additionally, it is worth considering any expected changes that you may see as part of your estate. Are you expecting an addition or removal of an asset in the near future (ie. an inheritance)?

It’s equally important not to forget your liabilities such as any debts you own that may need to be passed on. A financial planner can help you to create a debt solution as part of your estate plan. 

3: Plan for Taxes!

It’s important to understand how taxes could have a significant impact on how much you pass to your heirs when you die. 

While your goal may be to support your partner, children, or other loved ones, your choices may actually be doing the complete opposite.

It’s important to consider your beneficiaries’ financial situations. Distributing your assets (including your ongoing income) can bring different tax implications and obligations.

For example, while superannuation distributed to a surviving spouse or dependent children is generally tax-free, non-dependents (including adult children) may be required to pay tax on amounts they receive. This will depend on how much of your super is made up from pre-tax and after-tax contributions.

4. Continue to Review Your Estate Plan Regularly

Like your will, a good estate plan should be updated on a regular basis. 

Marriages, divorces, funerals and retiring are all ideal times to review your estate plan and ensure that the correct people are protected and that your plan accounts for your current assets. 

Estate Planning with Cambio Group

Estate planning is all about securing your future and the future of the loved ones you leave behind.

Cambio Group is here to assist you at every financial stage of your life. With our dedicated team, you can be confident about your family’s financial future. 

We can help you create a tax-effective estate plan well-suited to your assets and to create positive outcomes for your beneficiaries.

Contact our team today!

Disclaimer: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.