What is Estate Planning in Australia?

What Is An Estate Plan?

Put simply, estate planning is deciding how your affairs will be handled when you die or become incapacitated. This covers everything in your estate- from money, property, business possessions and any other assets or liabilities under your name.

Whether outlining intended beneficiaries, business succession planning or enduring power to someone to make your medical decisions- a proper estate plan stands to benefit you in life, and your family in death. More than just distributing certain assets, it's also your chance to take control of the legacy you'd like to leave.

It also offers the chance to identify an executor, guardian for minor children and power of attorney to carry out your wishes. All in all, it's the ultimate way to manage your affairs, safeguard your wishes and arrange financial support for your loved ones in the future.

Legal Documents Within a Legal Document

Estate plans essentially bundle a number of important legal documents together. This includes a valid Will, Family Trust, Power of Attorney and details around life insurance, superannuation or death benefit nominations. The cumulative effect of an effective estate plan also minimises taxes on your assets for the future sake of your beneficiaries.

Is an Estate Plan the Same as a Will?

A Will is a standalone document which outlines how your assets will be distributed when you die. On the other hand, estate planning is more about the big picture when it comes to end of life matters.

The Key Difference

One of the main differences is that an estate plan can guide what happens if you get sick or lose the mental capacity to make decisions. Giving your Power of Attorney the authority to act as your legal personal representative and managing director of all money, property and business whilst you're still alive.

Strategic planning for financial and legal decisions in estate management

In this way, the documents in your estate plan make financial provisions and plans which are not covered by a Will, like retirement savings or life insurance.

Whilst a Will gives legal authority to an executor, the person who is responsible for distributing assets a death, the focus is centralised on post-death estate management of assets.

In contrast, an estate plan is much broader, including:

• A Will

• Testamentary Trusts

• Powers of Attorney

• Guardianship decisions

• Advance care directives

• Life Insurance

• Superannuation death benefit nominations

• Burial arrangements

The Estate Planning Process

In taking into consideration more than just your assets and liabilities, estate planning requires more time and more complex understanding of the law, compared to writing a Will.

With this in mind, a big part of estate planning is about informing your loved ones how you want to be taken care of if you lose your mental faculties.

Why Go the Extra Mile With An Estate Plan?

In taking these extra steps to plan for the future, you can assist your family that bit more by reducing the burden during the grieving process.

From the documents to the law, business concerns to enlisting professional, legal help- there's a lot to think about in estate planning. To help navigate the process, Safewill has created the following instructions to get you started on the Estate planning process.

1. Create an inventory of all your assets and liabilities

Compile a list of everything you own in your name and assign a value to the Estate. The inventory should include:

• Savings accounts or debts

• Shares or bonds

• Any business shares or ownership

• Personal property

• Vehicles

• Collectibles

• Valuable possessions or items with sentimental value

• Life insurance policies

• Superannuation savings

2. Protect yourself and your family

A good Estate plan will spell out what to do if you can no longer make decisions while you are still alive. Protecting your family and your own interests means assigning responsibility to people you trust.

• Creating a Power of Attorney, Power of Guardianship or making an Advance Care Directive will give your family clear instructions, and assist them in handling your medical or financial needs if you become incapacitated

• Appointing a Guardian will ensure your children or pets are looked after by the right people when you die.

• Life insurance can act as an extra layer of protection when organising your affairs. This can help to pay off any debts in a deceased estate or help to offset potential capital gains tax liabilities.

3. Protect your assets

Creating a Will and other legal documents are an essential part of Estate planning. Now that you're armed with an inventory of all your assets it is time to decide how you want to keep them safe.

This can be done by creating a Will or setting up a Testamentary Trust. A Testamentary trust can also be a smart way to offset taxes on your assets for the sake of your Beneficiaries and intended trustee. Using the law to your advantage, you can use a trust to help reduce potential capital gains taxes imposed on assets sold off after your death.

4. Choose an Executor

Your executor is an integral part of your estate planning team. They are the person who will be granted powers to carry out your final wishes after you die. For this reason, an an Executor should be someone you trust should be someone you trust.

It can also be useful for them to have some professional, financial knowledge as they will be responsible for paying off debts and managing your Estate according to the law, and the terms set out in your Will. An Executor can be a family member, close friend, a lawyer, Public Trustee or other corporate provider. They can also be outlined as a beneficiary.

5. Review your beneficiaries

If you have created a Will it is likely you have already decided who your Beneficiaries are. But some intangible assets under your name do not necessarily flow to the same people named in your Will.

Superannuation funds or life insurance policies are not connected to your Will and Beneficiaries have to be identified separately with each provider. This may be something you did when you first set up your policy so it should be reviewed and updated as part of the Estate planning process.

6. Regularly review your Plan

Any good Estate plan should be reviewed and updated regularly. Major life events like marriages, divorces, birth of new children or deaths are a good opportunity to go back through your Estate plan and make sure the right people will be protected when you die.

It's also important to keep your Will, family trusts and finances updated with any changes in the law. Doing so ensures that your appointments are approved by the supreme court when the time comes.

FAQs

What is involved in estate planning?

Estate planning is the process of managing all your end of life affairs. It involves reviewing your assets and liabilities and then putting in place strategies to protect your Estate after death.

An Estate Plan could involve creating a Will or Trust, as well as assigning powers to the person you wish to be your professional or personal Power of Attorney. To protect your children, you can also appoint a Power of Guardianship in your estate plan.

Having these provisions in place ahead of time makes the probate process easier, gives the supreme court all the right people to contact and safeguards the legal right of your intended beneficiaries to your remaining estate.

What is the Average Cost of Estate Planning?

The cost of estate planning can vary significantly depending on your needs and personal circumstances. A basic estate plan involving a Will, Power of Attorney and an Advance Care Directive could cost as little as $600-800.

In contrast, more complicated plans involving Trusts, joint-assets or large blended families could range from $1,200 to $8,000 depending on how much time a lawyer has to spend on the paperwork. An initial meeting with an estate planning lawyer could help forecast this cost.

To Wrap Up

When most people think of death the first thing that comes to mind is creating a Will. Whilst it's a good start, writing a Will won't solve all your problems if it neglects assets tied up in life insurance or Superannuation funds.

In contrast, creating an in-depth Estate Plan allows you to take stock and manage your estate and assets- ensuring they will flow to the right people when you die. It eases probate for your family, gives instructions if you get sick and helps your family make important medical or financial decisions for you on your deathbed.

Minimising Capital Gains Taxes and Maximising Financial Benefits

What's more, an estate plan even has financial benefits. Helping you to implement smart strategies to minimise capital gains taxes or other taxes imposed on your estate.

Write Your Estate Plan with Safewill

Safewill offers an easy, supportive and affordable service for all things end of life planning. From writing your Will from the comfort of your own home, to assigning your POA on your commute to work- we oversee your estate planning around you. Overseen by real lawyers, compassionate experts and a team ready to support you at each step of the way.

Get in touch today

Start your estate planning today, to support your family in the future. It's peace of mind, it's security, and it's taking control of your legacy in one.

Reach out on 1300 730 639, or via live chat now to find out more.