Some people think that estate plans are for someone else, not them. A common misconception is that estate planning is only important for the wealthy or elderly. They may rationalise that they are too young or don’t have enough money to reap the benefits of a plan. But here are some more reasons why estate planning is for everyone, regardless of age or net worth.
- Loss of capacity. What if you become incompetent and unable to manage your own affairs? Legal, medical and lifestyle decisions will need to be made for you, but without a plan the courts will have to select the person to manage your affairs. With an integrated estate plan in place, you choose that person, through a careful combination of powers of attorney and advanced directives.
- Minor children. Who will raise your children if you die? Although a court will make the final determination, you are able to nominate the guardian of your choice in your Will, and the court will give very serious consideration to your wishes.
- Dying without a Will (intestate). Who will inherit your assets? Without a plan, your assets pass to your heirs according to your state’s laws of intestacy (dying without a will). Your family members (and perhaps not the ones you would choose) will receive your assets without benefit of your direction or of trust protection. With an integrated estate plan, you decide who gets your assets, and when and how they receive them.
- Blended families. What if your family is the result of multiple marriages? Without a plan, children from different marriages may not be treated as you would wish. With a plan, you determine what goes to your current spouse and to the children from a prior marriage or marriages.
- Children with special needs. Without a plan, a child with special needs risks being disqualified from receiving Medicare or Centrelink benefits, and may have to use his or her inheritance to pay for care. With a plan, you can set up a Special Needs Trust that may allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered expenses.
- Keeping assets in the family. Would you prefer that your assets stay in your own family? Without a plan, your child’s spouse may wind up with your money if your child passes away prematurely. If your child divorces his or her current spouse, half of your assets could go to the spouse. With a plan, you can set up a trust that ensures that your assets will stay in your family and, for example, pass to your grandchildren.
- Financial security. Will your spouse and children be able to survive financially? Without a plan and the income replacement provided by life insurance, your family may be unable to maintain its current living standard. With a plan, life insurance can mean that your family will enjoy financial security.
- Superannuation & life insurance. Do you have super &/or life insurance? You may have nominated beneficiaries for those assets, in which event they will bypass your Will. Without a plan, your designated beneficiary for those assets may not reflect your current wishes and may result in unintended tax consequences for your heirs. With a plan, you can choose the right beneficiaries.
- Business ownership. Do you own a business? Without a plan, you don’t name a successor, thus risking that your family could lose control of the business. With a plan, you choose who will own and control the business after you are gone.
- Minimising or avoiding probate. Without a plan, your estate may be subject to the inherent delays and fees of obtaining probate. With a plan, you may be able to structure your affairs so that probate can be avoided entirely.
- Privacy. With probate, your assets will be a matter of public record. With an integrated estate plan, you may be able to keep private some or all of your assets.
- Death Duties. In some parts of the world, death duties and estate taxes still exist. Certainly Capital Gains Tax exists in Australia. It makes sense to arrange your affairs within an integrated estate plan to minimise the potential effects of these taxes.
- Asset Protection. Your assets may be vulnerable to attack from creditors, lawsuits etc. A fully integrated estate plan can help to protect you, your family, your business and your assets; in fact pretty nearly everything you care about.
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.
SPECIAL REPORT “7 Things You Must Know Before You Make Your Will”
In this report you will Learn:
Why home-made Wills can be a LOT more expensive than you might think.
The secret weapons used by the rich & powerful to protect their assets, and transfer their wealth two or three generations ahead.
How Estate and Trustee Companies make BIG money from “free” Wills.
The Most Common Estate Planning Mistakes, how they can cost your family a fortune, and How to Avoid Them.
The Elements of a Sound Estate Plan – why a Will alone is not enough.
How to Make Sure Your Assets Stay in Your Family and are not lost to creditors, lawsuits or ex-spouses.
How to guard against challenges to your Estate after you’re gone.