Similar to the insurance life policies, paying for estate planning considerations is a strange premise as you yourself will never directly benefit from it. For most people estate planning is recognition of their mortality, for others it is simply an exercise of annoyance as one has to navigate through twists and turns. However, it is very important for the loved ones you leave behind and for your assets and possessions which would be distributed in the exact manner in which you desire.
5 Key Areas where all individuals should consider when they think about their own estate planning needs:
Having A Will
Anyone over the age of 18 that has any assets to speak of should have a will. A will is just a document stating what you want to happen to your property after you die. It is used to legally enforce who gets what after your passing, particularly if a dispute arises among your heirs. It is also one tool to avoid certain taxes by distributing your assets in certain ways in order to avoid taxation thresholds.
Setting up a Death Nomination or Reversionary Beneficiary for your super / pension account?
You need to set up a death nomination, as super is not automatically paid to your estate to be distributed according to your will, it is at the discretion of the trustee how the amount will be paid, Unless you have one of the aforementioned arrangements in place, in which case they are legally bound to distribute assets as you have specified.
Nomination of a beneficiary for your life insurance policy
Insurance policies lets you nominate a beneficiary. Such policies can have multiple parties; the life insured, the policy owner, the person paying the policy premiums, and the beneficiary. It’s often the case all these parties are the same person, but not essential. If no beneficiary is nominated, the benefit is paid to your estate, another good reason to have a will to dictate where these funds then go.
Considering the tax consequences relating to your assets being distributed.
Beneficiaries can be hit with different forms of tax, such as Capital Gains Tax, and many others. To minimise such taxes it is important to plan in advance.
A Durable Power of Attorney
A durable power of attorney is a document that gives someone else the power to handle your finances and legal affairs should you become incapacitated, but expires upon your death. You can use this attorney to allow someone to represent your interests should you become incapacitated through illness or injury. It is very important to choose someone you trust and to understand the risks in giving someone else control of your affairs. The person you designate is legally bound to act in your best interests however you can revoke the power of attorney at any time.