No one wants to think about it, but it's important to have an estate plan that specifies how you would like your assets to be managed when you die.
An estate plan includes your will and other documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future. The most important documents are:
- Superannuation death nominations (beneficiaries)
- Testamentary trust
- Powers of attorney
- Power of guardianship
- Anticipatory direction
You should ask a legal professional to prepare your estate plan. A good estate plan does two things: it will minimise the tax paid by your heirs, and it will help avoid any family squabbles.
Beneficiaries for your superannuation
If you have made a binding nomination for your superannuation benefit or insurance policies, the beneficiaries named in those nominations will override anyone mentioned in your will.
If you have a family trust, the trust continues and its assets will be distributed according to the trust deed, no matter what is written in your will. So it’s important to keep your beneficiaries up to date.Find out more about nominating beneficiaries
A will takes effect when you die. It covers things like how your assets will be shared, who will look after your children if they are still young, what trusts you want established, how much money you'd like donated to charities and even instructions about your funeral.
Your will can be written and updated by private trustees and solicitors, who usually charge a fee. You can also buy will kits online but it's a good idea to ask a solicitor to review your will to make sure everything is in order. If a will isn't signed and witnessed properly, it will be invalid.
If you are thinking of using a do-it-yourself will kit, Choice has reviewed five products currently available.
It’s imperative to keep your will valid and up to date. This is because your legal rights and entitlements change following certain events such as marriage, divorce or separation; the birth of children or grandchildren; the death of your spouse or beneficiaries; or a significant change in your financial circumstances.
Appointing an executor of your will
The executor is a person who has been nominated by you to oversee the administration of the estate (or your will) following your death. Usually the executor is a family member(s) or a trusted advisor.
You should always advise the executor(s) of their appointment and, in most cases, the main beneficiaries will be one of the executors.
Powers of attorney
Appointing someone as your power of attorney gives them the legal authority to look after your affairs on your behalf.
Powers of attorney depend on which state or territory you are in. They can refer to just financial powers, or they might include broader guardianship powers. You will need to check with your local public trustee.
What are the different types of power of attorney and related appointments?Show more
- A general power of attorney is where you appoint someone to make financial and legal decisions for you, usually for a specified period of time, e.g. if you're overseas and unable to manage your legal affairs at home. This person's appointment becomes invalid if you lose the capacity to make decisions for yourself.
- An enduring power of attorney is where you appoint a person to make financial and legal decisions for you if you lose the capacity to make your own decisions.
- A medical power of attorney can make only medical decisions on your behalf if you become unable to do so yourself.
- An enduring power of guardianship gives a person the right to choose where you live and make decisions about your medical care and other lifestyle choices, if you lose the capacity to make your own decisions.
- An anticipatory direction records your wishes about medical treatment in the future, in case you become unable to express those wishes yourself.
- An advance healthcare directive (or living will) documents how you would like your body to be dealt with if you lose the capacity to make those decisions yourself.
The documents you choose to draw up will depend on your situation, and the responsibilities you wish to entrust to others. You should seek legal advice to discuss and clarify the documents and appointments appropriate for your circumstances.
Keep records of all your personal details
It’s a good idea to keep a record of your personal information and notes on how your legal documents, assets and investments are arranged.
These are the key documents you should have on hand:
- birth certificate
- marriage certificate
- enduring power of attorney
- advance healthcare directive (also called a living will)
- personal insurance policies
- house deeds
- home and contents insurance
- deeds and insurance policies for any other real estate you own
- bank account details
- superannuation papers
- investment documents (securities, share certificates, bonds)
- Medicare card
- medical insurance details
- pensioner concession card
- any pre-payments of funeral investments.