Estate planning is not just for retirees

Many people believe that estate planning is a task you start when you are getting close to retirement… but the truth is, you really should begin planning much earlier than that! In fact, it’s never too early to plan your estate, because you never know what could happen tomorrow.

While you might not like to talk about the inevitable… it’s important to be pragmatic about the realities of life. As soon as you join the workforce, you start to build assets that form part of your estate.

Even if your super balance is only low, it’s likely that you will have insurances held within your fund that would need to be distributed should something unforeseen happen. Regardless of your age, it is worthwhile having a formal plan in place to make sure assets are distributed according to your wishes.

What is estate planning?

Estate planning isn’t just writing a will. That is certainly a key part of the process, but it also includes information about the way in which you will be cared for financially and medically if you can no longer make your own decisions.

Plus, it outlines how you wish your assets to be managed and who would be assigned as your guardian should you become mentally incapacitated or suffer from a physical disability.

You can also include the creation of a trust within your estate planning.

This would see your assets managed by a chosen trustee until your beneficiaries reach an age where they are able to access the assets responsibly.

Executors, attorneys and trustees

Choosing the people you wish to manage your affairs is an important step and should be done in consultation with trusted members of your family or closest friends.

Careful consideration is needed when you are appointing each role, as it is a very personal decision.

Depending on your preference, you can appoint a single person to oversee all these roles, or you can select a different person for each.

You can also decide whether you want them to work jointly or have autonomy in the decision making process.

Your executor is appointed to action the instructions outlined in your will.
Your attorney is legally authorised through ‘power of attorney’ documentation to act on your behalf in financial and lifestyle matters. There are various types of attorneys that you can select. Each has a different set of guidelines. If you appoint an enduring power of attorney, they will be able to make decisions for you if you lose your capacity due to illness or injury.
Your trustee is appointed to administer the assets held within your estate’s trust.

You should also consider appointing someone who can make decisions regarding your health and medical wellbeing. In NSW this is done through appointing an enduring guardian. The State Government has information that can help with this process.

When should you review your estate plan?

Throughout your life there will be many different events that could affect your plans. Each of these key milestones should trigger a review of your will and could also impact who you want as your executor, attorney or trustee.

Buying property
Property is usually one of the most significant financial assets you will have. When you make a property purchase, it’s important to consider how you would like it to be treated when you are gone. Do you want it to be left to someone in your will or transferred to your trust?

Getting married… or separated
Marriage or a formal partnership often prompts estate planning – writing your wills to outline how your assets would be distributed should one of you die and appointing your chosen attorney. But it is more common for people to review their estate plan when they separate. You probably won’t want your ex-spouse to be your executor and your desired asset distribution is likely to change.

Having children
With every addition to the family tree, you should review elements of your estate plan. How and when your assets are shared and whether you add another person to your trust should be updated when you have children.
Starting a business or an SMSF
If you start your own business or you set up a Self Managed Super Fund (SMSF) you need to be sure that you understand how these assets would be treated should something unforeseen happen. Both have structures that may not be included within your estate, so we recommend seeking professional advice to make sure you have the correct legal documents.

Don’t forget your super

You may not realise that your superannuation is not classified as an asset of your estate.

It is not included within your will as it is recognised as a superannuation death benefit. It is distributed as per your binding nomination, which you should have set within your super fund details.

But if you have not made a nomination or it has lapsed, the benefit is likely to be distributed at the discretion of your fund’s trustees.

You can nominate your estate as the beneficiary, then your executor would distribute the funds according to your will. Super regulations are complex, so again we recommend discussing this with an advisor to make sure you make a valid nomination.

Other considerations

Finally, you should also consider the tax implications of transferring your assets to your beneficiaries. Understandably, these can be highly complicated and difficult to navigate without professional guidance.

Discussing your personal situation with a financial advisor can help you find tax-effective estate planning strategies. If you would like to find out how the team at North Advisory can help you, please contact us today.

It’s never too early to start estate planning

What is estate planning?

Executors, attorneys and trustees

When should you review your estate plan?

Don’t forget your super

Other considerations

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