Estate planning is a crucial aspect of securing your financial future and ensuring that your loved ones are taken care of in the event of your passing. Seniors who have lived a long and productive life may want to look at leaving behind for their family after the end. To that end, things require a tedious bit of estate planning.
In Australia, estate planning involves creating a comprehensive plan for the distribution of your assets and liabilities, and it’s essential to keep your estate plan updated regularly. With regular life changes, including the acquisition of new assets, changes in family circumstances, and updates to the laws and regulations, it’s vital to review your estate plan regularly to ensure that it remains relevant and up-to-date.
In this article, we will explore some of the key considerations for reviewing your estate plan, including tips for leaving behind a legacy and updating your last will and testament.
Review your assets and liabilities
The first step in estate planning is to take stock of your assets and liabilities. This includes all your personal and real property, investments, bank accounts, life insurance policies, pensions, and any other assets that you may have. Once you have a clear understanding of what you own, you can then start thinking about how you would like to distribute these assets upon your passing.
You should also keep in mind any outstanding debts and liabilities that you may have, such as mortgages, loans, and credit card debt, which will also need to be taken into account when creating your estate plan. Settling the debts as much as possible may be a viable option, as Part XI of the Bankruptcy Act 1966 allows creditors to seek claims with the estate even when the person passed on. The Federal Court may entertain motions for Part XI unless the State or Territory Court is already holding proceedings under similar local legislation.
Some seniors may think the superannuation fund is among the assets to be handled in your estate planning. However, the Federal Court of Australia has ruled that public supers (not SMSFs) are not included in the estate listing even if you mentioned it in your will. Only the super’s trustee or trustees have the authority to disburse the balance, but you can program the disbursal through a Binding Death Benefit Nomination, which will have a secure process you need to prepare and execute properly.
Take your family into account in your estate planning
When creating your estate plan, it’s important to consider your family circumstances. This includes any children, spouses, or other dependents that you may have, as well as any other close relatives or friends who you would like to provide for. You should account for the financial needs of your loved ones and any special circumstances that may arise, such as a child with special needs or a spouse who is unable to work.
However, if you are already separated/divorced from your spouse or partner, they can be automatically excluded from the list of beneficiaries per the will; each state or territory will have their own definitions on the process. The separation/divorce prevents the exes from filing claims on your estate as long as they were served the papers. The exclusion may also apply to family members long estranged, but talk to your solicitor if they might be somehow eligible to file a claim per the Succession Act even when you might not want them in the equation at all.
Update your will
Your will is a crucial document in your estate plan, as it outlines how you would like your assets to be distributed upon your passing. It’s important to keep your will up-to-date, especially as your family circumstances and assets may change over time. Reviewing your will regularly will help ensure that it accurately reflects your current wishes and that your assets are distributed according to your intentions. If you need to make changes to your will, it’s important to seek the advice of a professional, such as a lawyer, to ensure that your updates are legally binding.
If you are a divorcee but got remarried, you must draft a fresh will with the original will as base material, updated to reflect the current situation, especially the family dynamics if your new spouse has children from their previous relationship.
Consider tax implications
As part of estate planning, it’s important to take into account how your plan may affect your taxes. In Australia, there are taxes on gifts, inheritance, and the transfer of assets, and it’s important to understand how these taxes may affect your estate and your beneficiaries. A professional such as a financial advisor or accountant can help you understand the tax implications of your estate plan and ensure that you take the necessary steps to minimise your liability.
Leaving a legacy
In addition to providing for your loved ones, estate planning also provides an opportunity for you to leave behind a legacy. Whether you want to make a charitable donation, support a cause that you’re passionate about, or pass on your values and beliefs to future generations, estate planning can help you achieve these goals. Consider including provisions in your will for charitable donations or setting up a trust that will support your chosen cause or organisation.
Seek professional advice on estate planning in Australia
Estate planning can be complex and overwhelming, and it’s important to seek professional advice when creating or updating your estate plan. A lawyer, financial advisor, or accountant can help you understand the laws and regulations surrounding estate planning in Australia, as well as provide guidance on how to distribute your assets and minimise your tax liability. Furthermore, they can assist you in handling any difficulties that may arise.
The ASAG Reverse Mortgage
The ASAG Reverse Mortgage may have a role to play in reviewing your estate. Depending on the size of the property’s equity, part of the resulting loan may be used as payment for an estate planning solicitor’s legal fees, or for any purpose, including Retirement Planning.
Preparing the future of your estate is an honourable thing to do for your loved ones. If you want to learn more about our reverse mortgage and its mechanics, the ASAG team is available to provide you with additional information. You can contact us by dialling 1300 002 724 or emailing email@example.com with your inquiries about our equity release solutions.
In addition, you can use our complimentary tool below to evaluate the equity that’s accessible in your residence and begin the process.