Why Estate Planning is Important

Proper estate planning is important, as it can help ensure your estate is distributed according to your wishes after you die. Without a proper estate plan, your estate assets may pass to family members who you would not have chosen to receive anything. 

Estate planning involves:

• Planning for Incapacity: Establishing an enduring power of attorney, enduring guardianship form, and an advance care directive allows you to protect your interests by appointing someone you trust to make financial and health decisions if you lose capacity due to age, accident or illness. 
• Ensuring your estate passes to those of your choosing: Preparing a valid will can help ensure your estate passes to those you choose when you die. Without a valid will, your estate will pass to family members according to law and may include people you are not close with. 
• Protecting Minor Children: By appointing a guardian in your will, you can ensure that someone you trust will take care of your children who are under the age of 18. 
• Minimising Tax Liabilities: Effective estate planning can help minimise taxes, such as capital gains tax and income tax, and ensure more of your assets benefit your beneficiaries.
• Managing Superannuation and Insurance Policies: Including superannuation death benefits and life insurance policies as part of your estate plan ensures they are distributed according to your wishes.
• Business Succession Planning: If you have a family business, proper estate planning can help ensure control and ownership of the business passes to those you choose. 

The Estate Planning Process

Estate planning is the process of organising and preparing legal documents to ensure your assets are distributed according to your wishes and to provide for the financial and legal decisions that need to be made on your behalf if you become incapacitated. This summary guide outlines the key steps in the estate planning process.

Creating a valid Will

A valid will is a crucial legal document that outlines how your assets will be distributed when you die. It allows you to appoint a legal personal representative, known as an executor, to administer your estate. The will should clearly specify which assets pass to specific beneficiaries, ensuring your wishes are carried out and minimising disputes. Creating a valid will is an essential part of estate planning that helps protect your assets and beneficiaries, including your spouse and children.

Establishing a Testamentary Trust

In some cases, a person may choose to set up a testamentary trust.

A testamentary trust is a trust established by your will that comes into effect upon your death. It allows for the longer-term management and distribution of certain assets for the benefit of your beneficiaries. This type of trust can provide ongoing financial support to minor children, protect the assets from creditors, and offer tax benefits. A trustee is appointed to manage the assets in the trust and make financial decisions in the best interests of the beneficiaries.

Appointing an Executor

An executor is responsible for administering the estate according to the terms set out in your will. This role includes identifying assets and liabilities, obtaining probate, and ensuring that assets are distributed in accordance with the terms of your will. Choosing a trustworthy and capable executor is vital, as they will act on your behalf to carry out your wishes. The executor’s duties include paying off debts and liabilities, filing tax returns, and distributing assets according to the will.

Setting Up a Power of Attorney

A general power of attorney is a legal document that allows you to appoint someone to make financial and legal decisions on your behalf, but it 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 financial and legal affairs can be managed if you cannot manage your own affairs. 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 yourself. 

Setting Up an Enduring Guardian

An enduring guardianship form is a legal document that allows you to appoint someone to make medical and lifestyle decisions on your behalf. An enduring guardianship form will only operate in the event that you lose capacity, such as due to age, illness, or accident. 

Incorporating Life Insurance into Your Estate Plan

Life insurance can be an important part of the estate planning process, providing additional financial security for your beneficiaries. The death benefit from a life insurance policy can help cover debts and funeral expenses and provide ongoing or additional support for your family. It’s essential to ensure that your life insurance policies are structured correctly and that beneficiaries are clearly named to avoid complications during the withdrawal or probate process.

Reviewing and Updating Your Estate Plan

Part of estate planning includes regular reviews and updates to ensure it reflects your current wishes and circumstances. Life events such as marriage, divorce, the birth of a child, or significant changes in financial resources should prompt a review of your estate plan. In that sense, estate planning is an ongoing process. Working with estate planning professionals can help you make necessary adjustments to protect your assets and ensure your estate passes according to your wishes.

Seek Legal Advice for Estate Planning With Empower Wills and Estate Lawyers 

For expert guidance in estate law, contact Empower Wills and Estate Lawyers. Our dedicated team can help you navigate complexities, protect your assets, and help ensure your wishes are honoured. We offer personalised advice and flexible fee structures tailored to your needs. Call us today at 1300 414 844 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.