Who would benefit from a full estate plan?
A standard will may not be enough to cover your needs. You may benefit from a comprehensive estate plan. This may suit you if:
- your assets include large non-estate assets such as family trusts, self-managed superannuation or business structures
- your estate assets, excluding family home, exceed $500,000
- providing tax-effective income streams to beneficiaries is important
- you have former spouses or children from more than one relationship
- you have beneficiaries who may be considered vulnerable due to age, disability or financial circumstances
- you wish to benefit successive generations, such as grandchildren.
Enduring power of attorney (financial)
At some point in your life, you may be unable to make your own reasoned decisions, either temporarily or permanently. An important aspect of estate planning is to protect your assets and safeguard your interests by appointing someone to make financial decisions on your behalf.
A power of attorney is a legal document in which you nominate who will make decisions on your behalf. A power of attorney is only valid while you are mentally capable of making decisions for yourself. However, an enduring power of attorney will continue to operate even if you subsequently lose mental capacity to manage your own financial affairs.
When does a power of attorney start?
Laws governing powers of attorney vary in each state, consequently the terms of each document will differ depending upon which state you reside. However, most enduring powers of attorney will allow you to specify when you wish the power to commence or the circumstances in which your appointed attorney can begin to exercise their powers.
Estate administration
Administering an estate is usually undertaken by the executor appointed in a will. They take on the responsibility and risk of transferring the wealth of the deceased in accordance with the instructions in the will. As there can be significant liabilities and on-going responsibilities attached to the role of executor, many people either appoint a professional to act as co-executor or transfer the responsibility to a trustee company.
How are superannuation and life insurance treated?
Your superannuation may be paid to one or more of your dependents or to the legal personal representative of your deceased estate for distribution under the term of your will. The terms of the trust deed of your superannuation fund determines who may benefit from your superannuation and in what form. You are able to lodge a nomination specifying your preferred beneficiaries and some superannuation deeds allow you to make a binding nomination.
If your life insurance policy is on your own life and you have not nominated a beneficiary, then the policy becomes an asset of your estate on your death. If someone other than you owns a life insurance policy on your life, or if you own the policy but have nominated a beneficiary to receive the proceeds, then upon your death the policy is not an asset of your estate.
Binding nominations
As there are tax and estate planning issues arising from the exercise of a binding or non binding nomination, you should seek professional advice before signing any directions or nominations.
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