Estate Planning: A Simple Guide
Last updated on March 3rd, 2022
Don’t let a lifetime of saving up and creating memories go to waste. Estate planning simplifies passing things on when you pass away.
Where to Begin?
Estate planning is a long and ongoing process, so here are 3 easy steps to help you begin:
- Make a list. List your:
- Physical Assets: These are an obvious inclusion of any estate plan. Make sure to list all physical items worth $100 or higher. This includes your house, cars, electronic devices, jewellery, and even that old grand piano.
- Non-physical assets: This includes personal or business bank accounts, stocks from any company, or any franchise rights. Don’t forget account details and names of companies when listing them.
- Retirement Plans: Pensions, superannuation funds, and insurance policies are essential in estate planning. Make sure that all premiums and contributions are up to date.
- Liabilities: List all your personal, home, car, business, or credit card loans. Include the balance and due dates. Plan how estate income will pay them off. Better be passing assets and liabilities without stress to your heirs.
- Know your risks. Plan ahead for losses, divorce, mental deterioration, or early death.
- Create an estate plan. After knowing your assets, liabilities, and risks, you can start your estate planning. Seek professional help for things you don’t understand.
The Estate Plan
A complete estate plan includes everything you want to settle after death. Here are important inclusions:
- The Will
The will is a big bulk in the estate plan. It outlines the distribution of wealth and things with sentimental value. It also contains other instructions for your funeral or children’s care. If you die without a will, the laws will apply. Writing a will is easy. Just follow these guidelines:
- All you need is a sound mind. A lawyer is not required.
- A will is valid whether typewritten or handwritten. Signature is a must!
- Select two witnesses who are not beneficiaries, your spouse, or anyone related to them. Let them sign the will too.
- Choose a responsible and trustworthy executor who can implement your wishes when you have passed on.
- Superannuation Death Nominations
The will excludes super funds. Benefits go to your chosen beneficiary in a binding nomination. Meanwhile, a non-binding nomination only guides the trustee’s decision in choosing the beneficiary. If there is no nomination, the trustee decides on his own.
- Testamentary Trusts
Establish a trust to hold your assets. The trustee manages your assets and distributes them to your heirs.
- Powers of Attorney
Give the authority to conduct your affairs by giving powers of attorney.
- Power of Guardianship
If you lose mental capacity, your chosen guardian makes personal and lifestyle decisions for you.
Estate planning is ongoing as long as you live. So, update regularly to make sure it stays true to your wishes.
When are My Passed-on Assets Taxed?
Assets passed to a beneficiary are generally not taxable. Beneficiaries are only liable for taxes when:
- Received assets are sold. Sale of assets is liable for capital gains tax.
- Earning income from the estate. Any income from the estate is taxable.
- Getting superannuation death benefits. Taxes on death benefits vary. Better consult an accountant for any taxation questions.
Estate Planning is Beneficial
Estate planning may be horrifying, but it has several benefits.
- Financial support: Make sure that your family is well-provided even when you’re gone.
- No disputes or stress: Rest with peace of mind by making known the rightful heirs to your estate.
- Tax-effective: Receiving assets is tax-free, but your estate is taxable. Good estate planning helps reduce taxes.
- Other future decisions: More than wealth distribution, estate planning includes medical care and funeral plans.
Why is Comparing Essential for Estate Planning?
Benefits from insurance policies and super funds are often enough to secure your family until they are back on their feet.
Choose life insurance policies with good benefits. Review super funds and find the right investment for you. Here at Makes Cents, we help you find the best for your needs. Use our comparison tool so you can have peace of mind as you enjoy your life.
