Here are a few practical steps to help you be prepared from a financial and administrative perspective.
1. Create a legal Will and keep it up to date.
Even if you don’t think you have a lot of assets, you need to have a Will because you don’t want the government to dictate what happens to your property after you are gone. It will save your family a lot of time and grief, because getting an estate in order after someone has died without a Will can take a lot of time and money. You may be surprised by how many possessions you own … Super, life insurance, a car … it all adds up.
It is important to discuss who will care for your children if something should happen to both parents. It is certainly a hard decision and there are many factors to consider.
Don’t risk a DIY Will-kit. They are little more than expensive pieces of stationery, and offer no backup or support. They even say on those kits that they are not intended as a substitute for legal advice! They are the cause of a growth-area in estate-litigation, because so many people make mistakes with them. The problems will only show up after you’re dead and gone. Then it’s your family & loved ones who have to wear the cost and all the delay and heartache to try to fix it all afterwards.
And don’t force your family to pay-through-the-nose for your “free” Will with an estate company. How could that happen? Easy. The estate companies (like Public Trustee for example) make their money from “free Wills” by insisting that you name them as your Executor when you die. Then they charge a commission on the value of everything you own – up to 4.4% of everything – which equates to over $17,000.00 for the average estate. That’s over $10,000.00 more than a specialist lawyer would charge to perform the same work. No wonder estate companies are happy to give you a “free Will” upfront … the hidden costs really hit home later on. That’s money your family will miss out on, if you don’t make the effort now to do things right.
Once you’ve created your Will, make sure you review it regularly and keep it up to date. Your personal circumstances will inevitable change as you grow older, and these will have an effect upon your intended plans. So too, changes in the law from time to time and from place to place require vigilance to ensure your estate plan remains current and effective.
2. Consider Life Insurance.
If someone you care about is dependant upon your income then it may be wise to consider a policy for about 8 – 10 times your income. Then once the life insurance money has been issued, your family can invest the money in a good growth investment so they can live off of the interest. In this way your lost income is replaced. This can provide peace-of-mind knowing that your loved ones will be okay for money if something should happen to you.
3. Create a modern integrated estate plan.
Making a Will and planning for your estate go hand in hand. An estate plan includes a Will, but goes well-beyond it. A modern integrated estate plan should consider all your assets, whether owned or controlled by you, and will make provision not only for your death, but also for your incapacity.
You see, your Last Will & Testament only has effect once you die. What happens to your assets if you are injured or become sick? It is sadly very common for people to lose their mental capacity through a whole range of events, such as accident, stroke, senility, dementia, Alzheimer’s, coma. How will your bills get paid if you lose your ability to make decisions & sign documents for yourself. How will your family cope?
So a modern integrated estate plan should include not only the Last Will, but also various Powers-of-Attorney and Advance Directives which you can create now, to protect against the bad things which might occur later in life.
The estate planning process is also where you can set up any trusts that you want to leave for your kids. You can specify the age that they receive their inheritance to help guard against “gold-diggers”.
Estate planning in Adelaide is not just for rich people. You may be surprised by how much you have.
Rod Genders is a senior Australian lawyer specialising in accident compensation and estate planning in Adelaide. His boutique specialist law firm is one of the oldest and most respected in Australia – visit it at www.genders.com.au . Rod is also a prolific author and speaker. Some of his articles and books on Wills, Probate, Trusts, Estate Planning, Asset Protection and Retirement Planning may be found at www.genders.com.au/adelaide-lawyer-blog.