You would have heard the saying: “where there’s a will, there’s a way”. This statement is usually used to encourage people who are losing enthusiasm for a task or goal.
But it also reflects the way many people feel about estate planning. They think that so long as you have a Will, you have a way to ensure your wealth is passed correctly to your loved ones. But this is not necessarily the case.
The truth about Wills
A Will can help ensure the assets that form part of your estate get distributed according to your wishes.
But did you know that a Will typically only applies to personally held assets and therefore may not deal with a significant portion of your wealth?
For example, the proceeds from your superannuation funds and life insurance policies don’t necessarily form part of your Estate. They can pass directly to certain beneficiaries nominated by you or go to your Estate where they’ll be dealt with by your Will.
Also, some assets never form part of an estate, like jointly owned assets or assets held in a discretionary family trust.
To cover all bases, thorough estate planning (or personal succession planning as it’s also known) involves putting in place strategies that address all your assets, not just those covered by your Will.
Do I need a personal succession plan?
Another common misconception is that personal succession is only for the wealthy or the elderly. However, just about every asset you own and every investment you make has estate planning implications. As a result, personal succession planning is something everyone needs to consider, regardless of age or stage in life.
At a minimum, every individual should have:
- a current Will to distribute estate assets
- an Enduring Power of Attorney to cover situations where they’re unable to make financial decisions themselves
- appropriate superannuation and insurance beneficiary nominations, and
- appropriate arrangements in place to distribute or pass control of specific assets that are not covered by the Will.
What are the benefits of personal succession planning?
Personal succession planning can:
- provide certainty by getting the right assets in the hands of the right people, at the right time
- enable you to provide for and protect your loved ones while minimising tax payable by your nominated beneficiaries, and
- provide certainty that your children are taken care of.
What are the consequences of NOT having a personal succession plan?
Personal succession is something you should address now. Don’t wait until it’s too late. If you die without a valid Will, intestacy legislation will determine how your estate assets are distributed among your surviving family members.
If you die without a valid superannuation or life insurance death benefit nomination, the proceeds may not be distributed according to your wishes.
And, if you’re badly injured in an accident or lose mental capacity, who will manage your affairs while you’re still alive but unable to make your own decisions?
How we can help
With assistance from legal and tax professionals where appropriate, we can:
- Ensure you’re making the right ownership decisions when acquiring new assets or re-structuring your existing assets. For example, we can help you determine whether it’s best to invest in your name, your partner’s name, or jointly with your partner. We may also identify whether further tax and legal advice is required to consider another arrangement such as a trust or company.
- Determine if you have sufficient means to achieve your estate planning objectives. Additional life insurance inside or outside of superannuation may be necessary to provide your family with a lump sum payment or an income stream to repay debts, meet their ongoing living expenses and cover your children’s future education costs upon your death.
- Develop a range of strategies to provide certainty, tax efficiency and/or asset protection. For example, we can explain superannuation death benefit and life insurance beneficiary nomination options. By making appropriate nominations now, your beneficiaries will be able to effectively and efficiently receive the death benefit when you’re no longer around.
We can help you address these and other estate planning issues as part of your broader financial planning.
Important information and disclaimer
This article has been prepared by Ray Ong of Access FP Pty Ltd T/A Fortitude Wealth Partners, an authorised representative of Godfrey Pembroke ABN 23 002 336 254 AFSL 230690. Any advice provided is of a general nature only. It does not take into account your objectives, financial situation or needs. Please seek personal advice before making a decision about a financial product. Information in this article is current as at 12 December 2018. While care has been taken in the preparation of this article, no liability is accepted by the Ray Ong, Access FP Pty Ltd T/A Fortitude Wealth Partners, Godfrey Pembroke or its related entities, agents or employees for any loss arising from reliance on this article. Any tax information provided in this article is intended as a guide only. It is not intended to be a substitute for specialised tax advice. We recommend that you consult with a registered tax agent.
| Contact us on 0893816811 for a consultation. Ray is a holistic, CERTIFIED FINANCIAL PLANNER® and LIFE RISK SPECIALIST® and has a Bachelor’s of Commerce in Financial Planning (with distinction). He is a member of The Financial Planning Association of Australia. We are based in Perth, Western Australia and specialise in retirement planning, wealth accumulation and wealth protection (life and disability insurance). |