Tag Archives: Estate Planning
When there is a Will, there is a Family Meeting
By Robert Wright /September 18,2015/
It’s probably not something you want to think about much less discuss with your kids but like it or not, one day we all pass away, and giving our loved ones a heads up on some of our financial affairs may make the process a whole lot easier.
That’s why when it comes to estate planning; it can be a good idea to call a family meeting with your beneficiaries, your financial adviser and your legal adviser.
Not only can a financial adviser keep things running smoothly and professionally but it’s also an opportunity for them to get an overview of your family’s circumstances as a whole. This way they are in a better position to determine the best strategy for you as a family.
Here are a few of the essentials they may cover off in a family meeting.
The contents of your Will
It’s a good idea to give your loved ones a heads up about the contents of your Will – in particular who your beneficiaries are and how much they are likely to receive in the form of an inheritance, super or life insurance benefit.
While this can be a difficult conversation to have and can often cause some friction among family members, it’s also an opportunity for you to explain your decisions. This may help in keeping everyone happy and avoiding family disputes after you’ve gone.
A testamentary trust
A testamentary trust can be a flexible way to ensure your wishes are carried out after you die. Basically, rather than being paid directly to your beneficiaries, your money is put into a trust and administered by a trustee appointed in the Will (until it expires). This can protect your assets against undesired tax consequences, divorce proceedings, bankruptcy and even being squandered by an irresponsible beneficiary. So if you’re setting up a trust, now could be the best time to air it.
Superannuation
Unlike other assets, your superannuation is not covered by your Will so it’s important to nominate beneficiaries. A family meeting is the perfect opportunity to set-up binding death nominations to ensure your intentions about your super are carried out.
Your powers of attorney
Powers of attorney are an important part of your estate planning – giving someone the legal authority to look after your affairs on your behalf if you lose the capacity to do so. This includes your enduring power of attorney, who makes financial and legal decisions and your medical power of attorney who makes your medical decisions, when you can no longer do so. A family meeting is a great place to discuss the appointment of powers of attorney as well as discussing important issues such as your views on treatment, your healthcare directive and if possible, how you would like to grow old.
Your investments, superannuation and insurance
If you’ve got any investments, super or insurance policies tucked away, now is the time to let your kids and your adviser know about it. Not only will your kids get a better idea of how you manage your finances (and may follow your lead) but you won’t have to worry about anything going missing after you’ve gone.
Get off on the right foot
As you can imagine, a family meeting can be quite an emotional experience and there is a lot to cover. So chances are you’ll be grateful to have an experienced professional around to maintain a level head and keep things running smoothly.
An additional benefit of holding a family meeting is introducing your financial adviser to younger family members. This will give you peace of mind knowing that in the event of your death, your children will already have a trusted adviser who can give them the financial support they need to manage your estate and invest any inheritance they may receive.
Better yet, now that you’ve got them in the door, your adviser may even be able to give younger family members some tips to get them started saving and investing today.
So to ensure your final wishes are met, avoid unnecessary family conflict and get your children off to a good start, plan a family meeting today.
Source: BT.
Estate Planning Essentials
By admin /April 24,2015/
We’ve all heard the terms “estate plan”, “will” and “trust”, however not everyone understands what they mean. Estate planning is the process of putting in place structures to ensure that the wealth you have accumulated over your lifetime is transferred to your beneficiaries in a tax-effective manner and in accordance with your wishes.
A will is an essential part of your estate plan. Your will is a legal document that outlines how your assets and possessions are distributed upon your death. It can cover a range of areas including making provisions for any children, assets that do not form part of your estate, as well as any charitable wishes you may have.
Your will should also nominate the executor of the estate. The executor is the individual who will be responsible for carrying out your wishes as outlined in your will.
Anyone over the age of 18 can be appointed and in most cases, they tend to be one of the main beneficiaries. The person appointed should be someone you trust, who will act responsibly, and who agrees to be your executor.
If someone has named you as the sole executor, it’s highly recommended to consult a solicitor due to obligations and responsibilities associated with the role. Administering an estate isn’t always straightforward, particularly if there are multiple beneficiaries. And as the executor, you can be held liable if you get it wrong.
Responsibilities of an executor may include:
- Applying for the death certificate from the Registry of Births, Deaths and Marriages
- Managing the funeral arrangements (if the will stipulates this, or if there is no next of kin)
- Locating and identifying the assets of the deceased
- Contacting all beneficiaries
What is a trust?
A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in a number of ways and can outline precisely how and when the estate’s assets will pass to the beneficiaries.
A properly constructed trust can help protect your estate from your heirs’ creditors or from beneficiaries who may not be able to manage money well. Instead of the assets passing to an individual beneficiary in his or her own name, they would pass to a legal entity controlled by, or on behalf of, the intended beneficiary.
As the assets are held by the trust on behalf of the beneficiaries, they are not treated as an asset of a beneficiary in the event of them being involved in any legal proceedings, such as divorce or bankruptcy. In addition, a trust can distribute income to certain beneficiaries, but the beneficiary doesn’t have any direct control over the assets held within the trust.
Powers of Attorney
A power of attorney is a legal document that allows another person to make decisions on your behalf. The person making a power of attorney is called the ‘principal’ and the person appointed by the principal is the ‘attorney’. There are two types of powers of attorney:
General power of attorney
A general power of attorney is where you appoint someone to look after your affairs for a specific period of time. With a general power of attorney, your appointed person can make financial or legal decisions on your behalf in your absence (i.e. if you are overseas for extended period of time).The general power of attorney can then make financial decisions on your behalf, such as paying bills or selling your house. It’s important to note that if you appoint a general power of attorney and you become incapacitated and are no longer able to make your own decisions, the general power of attorney ceases.
Enduring power of attorney
An enduring power of attorney is where you appoint someone to make financial or legal decisions on your behalf if, in the future, you lose the capacity to make decisions yourself. Enduring powers of attorney are useful for estate planning – if you become incapacitated due to illness or injury, or develop dementia, for example. Your enduring power of attorney can then legally manage all of your financial affairs.
How do you get started?
Estate planning is a complex area that requires careful consideration and assistance from qualified professionals such as an accountant, solicitor and financial adviser.
A well-structured estate plan will ensure your wishes are carried out once you are gone, and help protect the financial wellbeing of your dependants.
To find out more, contact your financial adviser.
Source: Capstone Financial Planning