What is Estate Planning
Estate planning is an important aspect of personal finance that is often overlooked. A common misconception is that estate planning is only for the elderly or wealthy. It’s a proactive measure that most should consider regardless of age or financial status.
Estate planning is the process of arranging for the management and distribution of assets in the event of death or incapacitation. It involves making important decisions about who will inherit belongings, who will make medical and financial decisions on your behalf if you are unable to do so, and how to manage tax implications and legal fees associated with assets.
The aim is to protect both your financial legacy and the well-being of your loved ones. It’s not just about ensuring that your wishes are carried out after your death but also about making sure that everything is in place in case of any unexpected incapacitation.
Why Estate Planning Matters
Estate planning is important to ensure that your wishes are carried out and that your loved ones are taken care of according to your intentions. Without clear instructions, it may lead to a higher likelihood of family disputes and confusion regarding assets held and distribution.
In addition to avoiding disputes estate planning can save time and money for your family.
Key Components of Estate Planning
1) Will
A will is a legal document that specifies how the assets will be distributed after death. A will allows for the nomination of beneficiaries for assets, name of guardians for children, and appointing an executor to carry out wishes. A will is the foundation of estate planning. Wills also allow for specific requests to be made, such as leaving sentimental items to particular family members or friends. This level of customisation ensures that even the smallest details of your estate are handled according to your wishes. It is important to update a will regularly, especially after major life events such as marriage, divorce, or the birth of a child to ensure it remains accurate.
2) Power of Attorney
A power of attorney is a legal document that authorises someone to act on your behalf for financial or medical matters. The two main types of power of attorney are financial and medical. Financial grants authority over financial decisions and medical grants authority for healthcare decisions on your behalf. It’s important to choose someone that you trust implicitly to carry out these responsibilities, as they will have significant control over your finances and healthcare.
3) Beneficiaries
Assets, for example, superannuation accounts, and life insurance policies, allow you to designate beneficiaries who will receive the proceeds upon your death. Beneficiary nominations can expire depending on the type, so it’s important to review these regularly.
Getting Started with Estate Planning
1) Listing Assets
Listing assets, including property, investments, superannuation accounts, life insurance policies, bank accounts, and valuable possessions. Knowing what is owned will help to determine how to distribute and can also help your family or executor to understand where all of the assets are held. This step is important for a thorough estate plan, as it provides clarity on what you own and ensures that nothing is overlooked.
2) Consider Goals and Wishes
Think about what you are trying to accomplish with the estate plan and how the assets can be distributed. These goals may include which family members to support, charity options, or tax and expense considerations. These goals will shape the decisions made throughout the estate planning process. When considering your goals, think about not only the financial outcomes but also the legacy you wish to leave behind. Many individuals use estate planning to make charitable donations, support causes that are important to them, or leave a lasting impact on their community.
3) Consult with Professionals
Estate planning is complex, and it’s important to seek guidance from professionals who specialise in the area. Consider consulting with an estate planning lawyer to help navigate the aspects of creating the estate plan. An estate planning professional can help you identify strategies you may not have considered and ensure that your plan is legally structured. Additionally, financial advisors can help with ensuring that your estate plan aligns with your overall financial goals.
4) Creating Estate Planning Documents
The estate planning documents are then drafted. It’s important to review the documents carefully and ensure they are accurate and reflect your wishes and are legally valid. Once your documents are complete, store them in a safe and accessible place. Ensure the executor and any appointed individuals, such as a power of attorney, know where to find these documents when the time comes.
5) Review and Update
Estate planning is an ongoing process that can benefit from regular review and updates if necessary. Life events such as marriage, divorce, birth of a child, or significant changes to finances can prompt a review. This will allow for the plan to remain current and effective.
The peace of mind that comes from knowing your wishes will be followed and assets will be managed effectively is invaluable.
At Unified Wealth, our team is highly experienced and provides goal-based advice and solutions for a range of advice strategies. Whether you are beginning your estate planning journey or looking to refine and update your current plan, we are here to guide you through every step.
After working as an advisor for a decade, Joel founded Unified Wealth.
Unified Wealth specialises in helping clients who are facing life’s big decisions.
Whether you’re contemplating your first property, growing your family or starting your investment journey we can help you focus on the simple steps to help you make your goals reality.
Our priority is making sure you have all the right information available to make the best possible decisions for you and those you love.
Our company values are:
Unity - We are most effective when we work together as a team
Trust - We are trustworthy and act in your best interests
Transparency - We are honest and communicate openly
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