Wills & Estate Planning – What is the Difference?
What is a Will?
A Will is a legal document that in essence does three things:
1. It is a written, signed and witnessed document that gives instructions on how you would like your assets and property to be distributed after you die.
2. It names your beneficiaries – who is going to receive part or all of your estate.
3. It confirms who you would like to be your executor – being the person who will manage the distribution of your assets. If you don’t have a Will a court-appointed person called an administrator will complete this task.
Note: If you have children who are under the age of 18 you can also nominate a guardian who will raise them.
What is Estate Planning?
Estate Planning may include making a will, however it is the broader concept of reviewing all of your financial circumstances and ensuring that you have prepared the fastest and most tax effective mechanism for distributing your estate when you die.
Estate Planning commonly considers:
1. Your Will.
2. Your funeral arrangements – make it clear if you have arranged a pre-paid funeral or if you have any specific requests.
3. Insurance – ensuring you have appropriate life and trauma insurance to protect you and your family.
4. If you own a business, structuring its affairs appropriately to ensure your intentions are carried out in the event of your death or a traumatic event that prevents you from working.
5. Preparing an Enduring Power of Attorney with appropriate substitutes – these can be made for a set period of time (say when you are on a cruise liner with no reception) or to take affect only when you become incapable of making legal and financial decision for yourself.
6. Preparing an Enduring Power of Guardianship with appropriate substitutes – nominates a person or people to assist you in making medical and care decisions as opposed to legal or financial decisions when you are unable or incapable of doing so.
7. Considering making an Advanced Health Directive.
8. What debts you have ( if any) – making a list of your personal loans, credit cards and mortgages will assist your executor as these will need to be paid out of your estate before the remainder of the estate is distributed to your beneficiaries.
9. Review your asset pool. Everyone’s circumstances are different so it is important to provide the details and locations of:
• The contact details of all beneficiaries.
• Your property paperwork (certificate of title, caveats and mortgage documents).
• Motor vehicles, boats, caravans and more.
• Share certificates.
• Superannuation funds.
• Bank accounts.
• Investment accounts.
• Collectables and personal assets such as jewellery; and
• Bonds and other tradeable investments.
10. Your professional advisors – give your executor clear instructions on who may be able to assist them with the finalisation of your estate. This can include your financial advisors, lawyers and stock brokers.
11. Insurance details – whether they are incorporated in your superannuation or not, listing your life insurance policies can assist your beneficiaries in determining the exact amount in the asset pool before making any distributions.
Why are they so important?
The four most common mistakes in estate planning are:
1. Not having a Will – recent studies have suggested that up to 45% of Australian’s do not have a valid Will. No one can see the future, it is important that if you are over 18 you have a will.
2. Having an outdated Will – Had a falling out with a beneficiary or think you know someone who could do a better job at being your executor than the current nominee? Changes your assets or how you hold them. Avoid mistakes and make sure you review your will every time there is a large change in your circumstances.
3. Thinking a Will is enough – reduce the stress and effort your executor has to go through by tying up your loose ends. Make sure your estate is clearly organised in the most tax effective way to avoid paying more to the man than to the people you love.
4. Not preparing Wills, EPA’s or EPG’s in time and not taking the time and cost to get good advice. Considering when making a Will you are determining what is to happen with everything you have worked so hard to acquire throughout your life time. Surely you should spend some time and money to ensure what you want to happen does.
Seeking Will and Estate Planning advice can ensure you are in the best placed position should something happen to you. It is particularly important to speak to legal and financial specialists to ensure you understand the tax issues that could arise as a result of your estate planning, insurance and superannuation.
This is particularly important when you own or direct a business as successful planning can ensure the business runs as usual without your presence.
Here at Lynn and Brown Lawyers we have dedicated lawyers who specialise in Will’s and Estate Planning. We respect that you have spent your time working to collect and provide you assets to your beneficiaries and we want to ensure that you are provided advice and a structure that best protects and supports your life’s work.