Having a will is an excellent first step, but you need more than just a will.
You may believe that having a will or estate planning is only for those with a large amount of assets and money. This is not the case. Having a will is about being prepared and ensuring that your estate is distributed the way you want it, and a will is just the first step. You need more than just a will. The starting point is to understand what you actually own, and what is owned by jointly, by a trustee or other factors.
More Than Just A Will: Estate Assets
An estate asset is an asset that you actually own and that is in your personal name, including cars, bank accounts and even shares. These assets will become estate assets in your will when you die; however, non-estate assets will not. Non-estate assets can include assets owned as joint-tenants, your super fund or assets owned by a business or a trust. That is why having more than just a will is so important: to deal with these assets that cannot be dealt with in your will.
Jointly Owned Assets
If you own an asset with someone else, once you pass away, the asset will immediately become the property of the other person. This is called the right of survivorship. The most common example of this is a husband and wife owning a family home together. This asset would not need to be addressed within your will as it will immediately pass on to the other owner. Other tupical examples of jointly owned assets include cars and bank accounts. However, if you do not want the right of survivorship to apply once you pass away, you need to make sure that the assets are owned in a different way. This can be very complex and you should seek legal advice to do so.
Superannuation cannot be dealt with in your will. If you do not include your wishes in an estate plan or sign a binding death nomination, the trustee of the super fund may decide to whom your funds are distributed. In most circumstances, your trustee will distribute your funds to your dependents who are usually children or your spouse. However, if you wish for your super to be dealt with differently, you need to create a binding death benefit nomination. The best way to ensure that your super is dealt in the way you want, is to make sure you have a binding death benefit nomination. You may not have a huge sum of money in your super, but it is likely to become one of your most significant assets. Other option is to establish a self-managed super fund, which gives you (or the trustees) total control over where the funds will be distributed. Always seek financial and legal advice before you set up a self-managed super fund.
The assets owned within a trust are not owned by you but by the trust and therefore won’t make up part of your estate.
When creating a trust, you can nominate your trustee and beneficiaries. However, after you pass away, these processes may change. Therefore, it is important to seek legal advice as your lawyer will be able to ensure you have correctly created your trust. Unfortunately, without a plan, your assets may not pass on to the desired people. You may also consider a testamentary discretionary trust, which offers greater flexibility and asset protection for your assets. A testamentary discretionary trust comes into existence upon your death and is more than just a will. It’s an important estate planning tool for any situation with complexity.
If you hold life insurance, it is best you research to what and how your insurance was created. Some life insurance is part of your super fund, which your will cannot deal with. When you pass away, you wish to ensure that your loved ones will have money to be financially supported, especially if you have young children. In most cases, your life insurance will list a beneficiary who will then be paid upon your death, once a claim has been established. If you are unsure as to how you want your life insurance policy set up, then seek legal advice as they will be able to provide support based on your circumstances.
It’s important to review your estate planning every 3 – 5 years or whenever you have a major life event like a birth or death. Everyone’s circumstances change over time, and this can have significant consequences on your estate.
It’s important to know that a will is just the start of estate planning and that a will may not address all your assets. If you have a super fund, life insurance and/or a family trust, you will need to look into estate planning more thoroughly. It is beneficial for your family and loved ones after you pass away.
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