Your personal succession plan

Estate planning – Your personal succession plan

There is often confusion surrounding the concept of estate planning, and too often people dismiss this as simply having a Will. But that is only part of the picture.

A complete estate plan allows you to deliberately plan for the future management of your assets, and to determine who will make decisions on your behalf should you become unable to do so in the future.

The first step to ensuring your estate assets are distributed as per your wishes, is to get a complete picture of your financial affairs including information about your financial position, structures and the important people in your life.


Important things to know about your Will

A Will is a key part of your estate plan, and when structured and executed correctly, it helps ensure the assets that form part of your estate are distributed the way you intended. This means that the right people benefit, and assets do not fall into the wrong hands.

Fun question. Did you know that a Will generally only applies to personally held assets? Most people assume (incorrectly) that their Will covers everything when they die.

What this means is that it may not deal with a significant portion of your wealth, including superannuation and insurance policies. These can bypass your estate and go directly to particular beneficiaries, who may have been nominated by you. To complicate things, you could also nominate that they go to your estate where they’ll be dealt with by your Will.

There are also other ownership structures which ensure that the assets never form part of an estate. Common examples of this are jointly owned assets or assets held in a family trust.

Estate planning needs strategies that address your whole situation and assets, not just those included in your Will.


How do I know if I need a personal succession or estate plan?

A common misconception is that personal succession and estate planning is only for older people or those with a lot of wealth. However, there estate planning implications for pretty much every asset you have regardless of the ownership. It goes a long way to looking after those you care most about after you are gone, and unfortunately we don’t always have a warning when our time is up. Estate planning is simply a part of good financial hygiene.

It doesn’t need to be complicated and getting the basics in place as a foundation has significant benefits. The basics that individuals prioritise having in place are:

  • Valid and current Will
  • Advance Care Directive
  • Enduring Financial Power of Attorney
  • Appointment of Medical Treatment Decision Maker
  • Appropriate superannuation and insurance beneficiary nominations
  • Appropriate arrangements and supporting documentation in place to pass on control or distribute any assets that aren’t part of your estate.


The benefits of a well constructed personal succession plan are significant

While you won’t be around to see the benefits, you will be creating significant benefits for those you care about. What we hear from clients is that it provides peace of mind that they have this together, and not creating headaches for their loved ones. Common benefits include the following:

  • Confidence that your children will be taken care of with appropriate guardians.
  • Greater certainty on what assets go to who.
  • The timing of certain assets being controlled in the case of younger beneficiaries.
  • Reducing the amount of your estate lost via tax payable.
  • Reducing the risk of your estate being successfully challenged.

What are the risks of NOT having an estate plan?

If you don’t have an appropriate and well constructed personal succession or estate plan, then you risk your wishes not being carried out. Also, your intended beneficiaries may receive less than they could have with an appropriate plan in place.

Dying without a valid Will, you die intestate. There is specific legislation which dictates how your estate should be divided and distributed. This differs depending on where you live, as the laws of the state or territory will decide how their estate is administered. This may not align with what you would have wanted.

Also important to note that not having a valid super or life insurance death benefit nomination means that you are leaving it to chance as to who receives the proceeds. This issue can be compounded if you also don’t have a valid and appropriate Will. The benefits that you have accrued or have been paying premiums for may go to unintended recipients.

Often less front of mind is the loss of capacity. What would you like to happen if you were suddenly to suffer a condition or accident which meant you were not able to look after yourself? You want to ensure that you have appointed your preferred and trusted person to manage your affairs and make decisions on your behalf when you are not able to do this yourself.


How we can help

We can work with you to understand your current situation and more importantly, what matters to you. We can then provide the necessary advice to put in place appropriate strategies which are designed to achieve your objectives in a tax-effective manner. Our role can also include facilitating and project managing specialist legal and tax professionals where appropriate.

If you want to have a chat with one of our financial planners about your estate plan, then find a time that suits here.