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Creating an estate plan

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By Capital Partners Ambitious Retirees

You might tell yourself. “I have a will, so why do I need an estate plan?”

A Will is a useful document for your beneficiaries when you die, but an estate plan covers a great deal more than a will can encompass. A properly constructed estate plan can protect your interests while you are still alive if you happen to be in a situation where you cannot advocate for yourself. You can also structure your estate plan to protect and support vulnerable family members after your death when you are no longer available to speak up on their behalf.

Maintain an up-to-date Will

If you die without a valid Will in place, you die intestate, which in turn can create complications and tension for your family that are best avoided. While the laws around this are intended to be as fair and equitable as possible, it is unlikely to reflect your true wishes and concerns. You also lose the opportunity to decide who oversees administering and making final decisions about your estate.

With a will in place, you can be confident that your wishes will be acknowledged and acted upon following your instructions. Your Will should always be updated if your circumstances change.

Consider the complexities of your family

Stepchildren, vulnerable family members, volatile family members – you want your legacy to protect all of them on your terms. This might mean leaving a lump sum to one child, who you trust to invest the money wisely in the future, and an annuity to another child who is irresponsible with money.

Talk to a financial adviser about whether a family trust estate plan is a good option for you.

This is a discretionary trust set up to hold a family’s assets to benefit current and future generations. It is beneficial when you have a family business. The purpose of the trust is to protect the assets as a whole, which can be beneficial when you consider your beneficiaries’ individual needs and weaknesses. For example, if one of your beneficiaries is irresponsible with money, the family trust will provide a small regular income, but any individual bankruptcy or insolvency will not impact the family trust assets as a whole.

Choose an executor who will respect your wishes

Your estate plan’s executor has a demanding role, where legal and tax knowledge would be beneficial. There can also be a great deal of emotional pressure if there is any conflict about your estate division between beneficiaries. You need to have absolute trust that your executor will honour your wishes as you have set them out in your will.

While many people choose a close friend or family member to act as executor, others prefer to hire a professional executor, such as a solicitor or an accountant, to handle the high level of responsibility and the role’s complexity.

Remember all your assets

When you are writing out your Will, don’t forget to include everything of value – this covers property, investments, jewellery, artworks, collectibles, family heirlooms, items of sentimental value. Keep your instructions specific. You should aim to make the distribution of your assets as straightforward and amicable as possible. If you forget to include a valuable piece of real estate or a diamond necklace, your family will argue over who has the rights to that particular asset.

Include an Advanced Health Directive

An Advanced Health Directive is a document that covers your wishes if you are incapacitated or terminally ill and can no longer communicate your wishes. For example, you could request that extraordinary measures such as cardiopulmonary resuscitation (CPR) should not be performed in certain circumstances. You can also appoint a durable power of attorney for healthcare, enabling someone you trust to carry out your end-of-life wishes. You can ask your lawyer to help you prepare this document and ensure it complies with the laws of your state.

Keep all documentation together and accessible

For the convenience of your executor and the peace of mind of your beneficiaries, make sure the following documents are kept together in a safe, accessible place:

  • Your last Will and testament
  • Your advanced health directive
  • Your life insurance documents
  • Your investment records
  • The location of all your assets
  • The names and contact details of all your advisers

If you would like a second opinion on your estate plan, contact Capital Partners or call on 6163 6100.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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