Key Components of Estate Planning

Wills and Their Importance

A will is a legal document that outlines how your assets will be distributed when you die. 

When preparing a will, you can appoint a trusted person, known as an executor, to administer your estate. As part of estate administration, the executor is also responsible for defending claims against the estate. 

The estate plan will also set out which assets pass to specific beneficiaries, which can help ensure your wishes are carried out and minimise disputes. 

Creating a valid will is an essential part of estate planning that helps protect your assets and beneficiaries, including your spouse and children.

Where a person dies without a will, they are said to have died ‘intestate‘. Where a person dies intestate, their assets are distributed according to the intestacy laws in the relevant jurisdiction. The risk of dying intestate is that your assets go to the wrong people. This can have significant financial implications on a person’s loved ones. 

Understanding Trusts and Testamentary Trusts

Some people – usually those with larger estates – choose to set up a testamentary trust. 

A testamentary trust is a trust that is established after a person’s death under the terms of their will.

Testamentary trusts allow for the long-term management and distribution of certain assets for the benefit of beneficiaries (including providing ongoing financial support to minor and adult children) while protecting the trust assets from creditors in a favourable tax structure. A trustee is appointed to manage the assets in the trust and make financial decisions in the best interests of the beneficiaries. Whether a testamentary trust is appropriate will depend on a range of factors. 

Power of Attorney: What You Need to Know

A power of attorney document is a legal document within which you can appoint someone to make legal and financial decisions on your behalf. 

A general power of attorney allows you to appoint someone to make financial and legal decisions on your behalf, but this ceases if you lose capacity. 

On the other hand, an enduring power of attorney continues to operate even after you become incapacitated, ensuring that your legal and financial affairs can be managed if you cannot manage them yourself due to age, accident, or illness. An enduring power of attorney can be an important part of estate planning, as it ensures someone you trust can act on your behalf if you lose the capacity to make decisions for yourself. 

The Role of Superannuation in Estate Planning

Superannuation and life insurance can play a significant role in estate planning and is often a person’s second-largest asset. 

The unique feature of superannuation is that it is not a deceased asset (unless the benefit is directed to be paid into the estate). Rather, superannuation is an asset held in trust for a person’s retirement. However, a person will usually have the option to direct where the money goes in the event they die. For example, most funds will give the member the opportunity to prepare a document called a Death Benefit Nomination Form (i.e. a binding death benefit nomination form) or a similarly named document within which they can nominate specific people or classes of people to receive the benefit upon their death. 

There are strict laws in relation to who a superannuation and the proceeds of life insurance coverage can be paid to and the tax rates that apply, and these details are often the subject of advice when it comes to estate planning. 

Some people may decide to distribute their superannuation to their spouse, children or other allowed beneficiaries. In contrast, others decide to pay the proceeds into their estate so the proceeds can become and form part of the deceased estate for distribution under the terms of the will. 

The Role of an Estate Planning Lawyer

The role of an estate planning lawyer is to prepare the necessary documents to give effect to a client’s testamentary wishes. 

Throughout the process, an experienced estate planning lawyer may be engaged to advise on various options, risks arising from specific bequests or laws and regulations, and tax consequences. 

Benefits of Working with an Estate Planning Lawyer

The benefits of working with a wills and estate planning lawyer include gaining a proper understanding of a person’s options and the specific risks arising from each option to allow a person to make informed decisions regarding their succession planning. Ultimately, an experienced estate planning lawyer can help increase the likelihood that a person’s assets will be distributed according to their wishes. 

An experienced solicitor can help reduce the risk of claims against the estate after a person dies. Specifically, an experienced estate planning solicitor can increase the likelihood of the will being held valid by the Supreme Court when someone dies. 

An experienced lawyer can also assist with tax planning throughout the estate planning process. 

When to Seek the Help of an Estate Planning Attorney

Circumstances where you should contact an estate planning lawyer include:

• You do not have a will. 
• You have a will but want to change your executor. 
• You have a will but have since divorced or married. 
• You have a will but are pregnant. 
• You have a will, but your wishes have changed. 
• You have a will, but your assets and liabilities have changed. 
• You have property in multiple jurisdictions.
• You have blended families. 
• You have a will but have been diagnosed with an addiction or serious illness. 
• You have a will but have had a meaningful family argument. 
• You are concerned someone may bring a family provision claim against the estate.
• You want to ensure a specific person does not benefit from your estate. 
• You have a complex estate.
• You want to explore more tax-effective options. 
• You do not have a Power of Attorney or Enduring Guardianship form. 
• You have a Power of Attorney but want to revoke or change it. 
• You have an Enduring Guardianship form but want to revoke or change it. 

Need an Estate Planning Lawyer in Sydney, NSW?

If you need an estate planning, probate, or business succession solicitor, contact the estate planning team at Empower Wills and Estate Lawyers on 1300 414 844 today to discuss your estate planning needs. 

Our dedicated team can help you navigate a client’s personal and financial complexities and financial matters, protect your assets, and help ensure that your assets go to those who you chose and that your wishes are honoured. We offer personalised advice and flexible fee structures tailored to your needs. Contact us today to schedule a consultation and secure your peace of mind.

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Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.