Estate planning is more than just making a will
A will helps you express your wishes in a concrete way so that your loved ones avoid uncertainty and legal complications when you die. It is the document which captures your wishes on what will happen to your estate, but, although it is an essential document it is not always a definitive way to manage what you want done with your estate.
Without a will, you leave yourself open to government discretion on how your assets are distributed and how your children are looked after if they are under 18. While the family’s best interests may be considered, the actual outcomes could be very different to what you would personally choose. The lack of a will can cause delays in settling your estate.
Depending on your situation, you may be able to use legal instruments, such as testamentary trusts, discretionary trusts or even a self-managed super fund to more effectively manage distribution and control of assets, rather than simply distributing directly through a will. This is particularly useful if you want to ensure that younger family members are restricted in their use of your assets until they are old enough to deal with them responsibly. They can also be used to prevent the complications that can arise from blended families or estranged family members.
Understanding tax implications and structuring affairs to manage tax can be an important part of estate planning. An asset you leave for one child may be subject to capital gains tax, whereas another asset left for another child may be exempt, unintentionally resulting in different final amounts to each child. Beneficiaries who are on government assistance may find benefits are affected by inheritance payments.
There can also be tax implications for your superannuation benefits and associated insurance benefits held in your super, depending on how benefits are paid and whether beneficiaries are dependents or non-dependents. All these issues are much better when considered at the planning stage rather than waiting for them to become a problem when it is too late.
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