Have you Protected your Family?
Estate Planning is fundamentally about dispersing your assets to those that you wish to receive them, in the best possible fashion.
Now when you are considering your estate, there are simple things to be mindful of such as ‘Joint Names’ or ‘Tenants in Common’. Tenants in Common means that you are sharing an asset and if you were to pass away then your estate will benefit from your share, not the other person directly. Whereas, if the same asset was in joint names and you were to pass away, the asset would pass directly to the other party. A smart time to purchase an asset in joint names is when you have a husband and wife that have children from previous relationships. If the plan of attack is to leave the asset to the surviving spouse, then it needs to be in joint names so that it doesn’t form part of the deceased estate because the estate can be challenged by any of the family involved, including those from previous relationships.
Another area to consider is the ownership and investments and making sure that you look at the binding death nomination within your superfunds.
You can’t rule from the grave but you can give it a bit of a nudge.
Estate planning is a matter of making sure that it is not too complicated as to be unwieldly and that in the event of something happening, you have the right insurance in the right place for the right amount. Your insurance needs to be available when your family needs it, because you won’t be there.
Peace of mind is gained by leaving your family in a position where they won’t have to worry about either the debts or being able to provide for things. So while money can’t replace you, it can make your loved one’s life a lot easier if you plan your estate properly. So having the right amount of insurance held in superfunds, binding death nominations and the correct ownership of assets are really important.
You also need to bear in mind that your goal post can change every 2-3 years. Therefore, we need to look at your circumstance regularly to make sure that your protection is current. Your circumstances can change; family considerations can change.
Another tough topic is that unfortunately, some parents do experience the passing of a child and while they may not have been concerned about their child’s in-laws before, it now needs to be considered. Their deceased child’s spouse may form another relationship and this could mean that instead of the parent’s assets going to their grandchildren eventually, it could go sideways. In these circumstances it may be better to leave the money in a trust for the grandchildren, where the surviving spouse may have to access the funds, however, for only their grandchildren’s benefit. So there are ways of protecting your estate accordingly.
The use of testamentary trusts could be of benefit too for some families, especially those with young children. A testamentary trust starts upon death and instead of leaving money to your spouse, you can spread the estates funds around amongst the children as they are treated as adults in the trust and can earn up to $18K each. The surviving partner still has total control of the assets to do with them as they like but it is just one way to get some tax efficiencies.
So with estate planning there are strategic considerations, there are ownership consideration and there are moving targets that need to be re-addressed and require you to revisit your plans on an ongoing basis.