Good Estate Planning will enable you to prepare, manage and preserve your assets in the event of a contingency such as incapacity or death in a timely cost effective manner without needless anxiety or bitter feuds between family members.
The new financial year presents an opportunity for you to start or review your Estate Planning requirements. If you are working on your estate plans, a check-list of all your assets and key items to sort out will make this task easier.
What follows is an overview of items to consider in respect to your estate planning requirements.
To get your estate plans in order, you should do the following:
- Prepare and review your list of tangible and intangible assets
Include all real estate and other valuable physical property: e.g. your jewellery, vehicles, artwork, collectable items, instruments, computers, iPads, professional equipment and accessories.
- Prepare a list of your non-tangible assets
Include non-physical assets you are entitled to: e.g. saving accounts, shares, annuities, copyright and other intellectual property, web-sites, including digital assets as such as your Internet accounts, photos etc. which you may have stored on your personal computer.
- As well consider your Digital Assets
See list Appendix A.
- Prepare a list of all entities you are involved in
List your companies, trusts, partnerships, joint ventures and also include charitable organisations in case your beneficiaries will want to donate some of your assets to a charity of your choice.
- List all your debts and credit cards
Specify all your mortgage loans, car loans, family loans, credit cards, even the ones with no debt on them. Cancel credit cards you do not plan to use ever again. Furthermore, prepare a list of your ID passwords.
- Review your retirement accounts, including self-managed superannuation funds
Make a list and ensure they have a nominated beneficiary to receive death benefit in the event of your demise.
Your Estate Planning requirements may need to be revisited if:
- You have new or changing personal or business requirements;
- Your Assets have increased or decreased in value;
- Your health circumstances have changed;
- Your other Family Members’ circumstances have changed;
- Other private personal circumstances require a review.
- Review your assets structured outside of your Estate
In this respect, review how your assets outside of your Estate are structured, including family trusts and partnerships.
- Check your life insurance
Think about funding which may be required, for example, to repay a mortgage on your family home or pay ongoing school fees. If you already have a life insurance, review your policy to ensure right beneficiaries are nominated by you.
- Keep your important documents up-to-date
Review all your important documents every 2 years and after major changes in your circumstances, e.g. marriage, birth of your child, divorce, death. Your documents may require amendments to reflect you changes.
For example, it is prudent to review your existing will regularly to ensure that it effectively meets your current wishes and objectives:
- at least every 2 years;
- If you dispose of or acquire significant assets;
- If you acquire significant debts or there is a likelihood you may become insolvent; or
- any major beneficiary dies, you could still or has a significant change in circumstances including a family law dispute.
- Choose your executor
The executor’s role is to apply upon your death to the Court of relevant jurisdiction to have your Will formally verified and receive a Grant of Probate. Your executor is then required to pay all your liabilities and distribute the net assets of your estate in accordance with your will.
The executor will have to make important decisions about your estate. The person or persons you appoint as your executor should be responsible, trustworthy and of good fame. They should also understand your estate and non-Estate assets and have the ability to execute your special Instructions.
- Choose a guardian for your underage children
If you have underage children, choose a trustworthy person or persons as their guardian in the vent of death of both parents. Ideally, the guardian is someone who is close to your family and knows your children’s needs well. Ensure your will includes provisions for a testamentary trust for your children until they are old enough to make responsible financial decisions.
- Prepare a will
If you do not have a current will, make an appointment with a solicitor to discuss your estate planning and prepare your will. Every adult should have a will. Even if you are in good health you could still have an accident. If you do have a will, make sure it is up-to-date: see item 9 above.
- Ensure your executor has your assets lists
Once the lists in items 1 – 7 are ready, make a few copies, sign and date them. Keep one copy in your files and ensure your executors have one copy each, including digital assets and passwords.
- Appoint your enduring guardian and attorney
An enduring guardian is a person appointed by you to make appropriate lifestyle decisions if because of disability you is partially or totally incapable of managing yourself: e.g. health care decisions. You should inform your enduring guardian of your wishes and discuss with them your views or goals. For example, if you do not wish to be kept on life support, let them know and put it in writing.
Remember that your enduring guardian can only make lifestyle decisions. You should make an Enduring Power of Attorney if you want someone to make financial decisions on your behalf if you lose capacity, e.g. buy and sell real estate, shares and other assets for you, operate your bank accounts, pay various expenses on your behalf.
- Manage your assets you plan to leave to your beneficiaries
Ensure title documents and other documentation with respect to your assets are in order and you have a routine for filing and keeping any new incoming documents. Keeping records relating to your assets is particularly important for capital gains tax purposes. After your death these records will be required in order to evidence and calculate any capital gain or capital loss that may arise upon the disposal of those assets. Your death is usually not a disposal of your assets for capital gains tax purposes. A disposal usually only occurs when the asset is sold by the estate.
- Keep all your important documents in a safe place
You can choose to keep your current will in safe custody at your solicitor’s office. A safety deposit box at the bank may be an option for your other important documents.
Wills and Estate Planning Lawyers at Pavuk Legal can assist you with a full range of legal services in respect to your Estate Planning needs including preparation of Wills, Testamentary Trusts, Advance Health Care Directive, Power of Attorney, Binding Death Benefit Nominations, Letter of Wishes, Probate and Management Services post death. With the right tools and processes your Estate Planning desires can be implemented appropriately for both you and your intended beneficiaries.
Many other essential hot topics for business owners is all found in the book Nobody Else’s Business. Nobody Else’s Business is about helping business owners live the life they want to live, now and in the future. It is the ultimate guidebook for succession planning of modern Australian businesses.
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