Preparing for Life’s Certainties: The Importance of Estate Planning

While the topic of our own mortality is never pleasant, taking the time to plan ahead can significantly ease the burden on loved ones during a difficult time. Here are three critical aspects of estate planning that require attention, complete with practical examples and solutions.

Directing Your Superannuation

Typically, the trustee of your superannuation fund has the authority to decide who receives your super and any associated life insurance benefits. Legislation requires these payments to go to your dependents.

Example: Consider a divorced individual who wishes to leave their super to children from a previous marriage, excluding their ex-spouse. Without specific directives, there’s a risk that the trustees may allocate part of the super to the ex-spouse.

Solution: Some super funds offer the option of a Binding Death Benefit Nomination, which allows you to specify exactly how your super should be distributed, ensuring your wishes are respected and not left to the discretion of the trustees.

Risks of Dying Without a Will (Intestate)

Dying without a will means your assets will be distributed based on state laws, which may not align with your personal wishes.

Example: A 27-year-old unexpectedly dies in an accident, leaving behind life insurance through her super and assets totalling $95,000. Without a will and with no dependants, her assets are divided between her estranged parents, contrary to her likely wishes.

Solution: It’s crucial to have a will that clearly outlines your wishes to prevent unintended distributions.

Ensuring Immediate Support for Dependents

The validation of a will through probate can delay the distribution of your estate, especially if the will is contested.

Example: The primary earner in a family passes away, but their recent will can’t be located, complicating matters for the funeral and legal proceedings. Additionally, a distanced family member contests the will, further delaying the process. The surviving spouse faces financial and emotional strain without immediate access to funds.

Solution: Keep essential documents in a secure but accessible location and inform your executor about where to find these documents. Consider a life insurance policy with a named beneficiary to provide immediate financial support independent of the estate.

Next Steps

Contact your financial adviser today. Effective estate planning is crucial for everyone, and your adviser can help streamline the process, reducing stress for your family and ensuring your final wishes are honoured.