Ingredients Of A Good Financial Plan Part 8 – Estate Planning

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Raffi Pailagian
Financial Planner / Managing Partner

Estate Planning & Why We All Need An Estate Plan

We’ve all seen it.  Someone dies and the family goes into financial freefall, because there was no Estate Plan in place to take care of those left behind.  Or even worse, a feeding frenzy stars over the assets and before you know it the lawyers are the only beneficiaries.

In this, our final article in the series Ingredients of a Financial Plan, we will cover why  Estate Planning is the last important piece in the puzzle, and how you might go about ensuring all the hard work you put into your Financial Plan continues to pay dividends, even after you are gone.

What Is Estate Planning?

Estate Planning is about much more than making sure you have a current will, although that is an important element.  Estate Planning is the process of anticipating the needs of your loved ones after your death and arranging the management of your assets to ensure those needs are met.

Why You Need An Estate Plan

Whether you have millions in assets, or nothing more than a home and some superannuation, if you have any assets, you need to have a plan.

A well-structured estate plan will:

  • Provide financial support for your loved ones and dependents if something happens to you
  • Eliminate potentially costly and lengthy disputes over ‘who gets what’
  • Ensure the practicalities are taken care of so your loved ones are able to grieve in peace
  • Maximise tax efficiency for both your estate and your beneficiaries
  • Provide clear instructions for your loved ones should you be unable to make decisions
  • Ensure your assets go where you want them to go

The Thing About Wills

Research shows that around 52% of Australians do not have a will[i].  This means when they die, their estate will become ‘intestate’ and rather than their assets going where they want them to, the State government will decide how to distribute them according to a standard legal formula.

This not only means the disbursement of assets will take longer, but they will not necessarily go where they want them to.

You might be surprised at how many people have a legal right to make a ‘claim’ on your estate – in fact, anyone who at any time was part of the household of the deceased may have a claim.  Nobody wants their hard-earned assets to go to someone they barely know, or no longer have a connection to.  So write a will people!

What Isn’t In The Will

Not all of your assets are ‘estate’ assets, and as such are not dealt with in your will.

  • Superannuation and certain insurances will either require, or have the option of, a Nominated Beneficiary.
  • Joint assets will automatically become the property of the remaining owner
  • Discretionary Trusts stand outside the will
  • Business interests, depending on the structure and ownership of the business, may not form part of your will

These assets, while not being part of your will, are still part of your estate, and need to be considered in your planning.

What To Do Now

If you don’t already have a plan in place there are two things you need to do:

  • Identify your assets
  • Identify your liabilities

A good Financial Adviser can help you with this.  Once you have established where you stand you can identify anything you need to add to your financial plan to make your Estate Plan effective.  That’s when you will need to draw up a will.  A good lawyer with specific experience in wills and estates can make sure it is well structured and legally binding.

If you need help determining how your estate will take care of your dependents and loved ones once you are no longer able to, Manly Financial Services have the knowledge and experience to guide you in the right direction.  If you would like to discuss your Estate Plan, or any other aspect of financial planning, give us a call on (02) 9976 3388 or click below and we will be in touch shortly.

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