It’s never nice to contemplate your own mortality but it is nice to know that you have an estate plan in place so that in the event of your death, your wishes are carried out. We have written this article to dispel some myths around estate planning and encourage you to ensure you have your affairs up to date.
1. No matter your net worth, it’s important to have a basic estate plan in place
Such a plan ensures that your personal, family and financial goals are met after you die. It also will help avoid disputes and ensure that you will be remembered as having taken the time to think considerately of others. The cost for a solicitor to prepare a basic will can be as little as $250.
2. A proper estate plan has several components
An estate plan needs to take into consideration how to implement your wishes after your death in line with federal and state laws governing estates. Many of the estate planning issues are typically addressed as part of the comprehensive financial plan that Fusion provides to our clients. By establishing the correct wealth creation structures today, estate planning becomes a much simpler and tax effective process. The basic components of an estate plan include:
- a will (documenting how you want your assets to be divided)
- a power of attorney (also can be referred to as a living will);
- an enduring guardianship (someone you appoint to make your personal or medical decisions if you should lose the ability to decide for yourself) .
- a testamentary trust (to hold and disperse assets after your death according to your wishes)
3. Taking inventory of your assets is a great place to start
Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Ask yourself, “Who do I want to inherit my assets?” and, “Who do I want handling my financial affairs if I was incapacitated?”
4. Everybody needs a will
A will tells the world exactly how you want your assets distributed when you die. It’s also the best place to name guardians for your children. Dying without a will — also known as dying “intestate” — can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die.
5. Trusts aren’t just for the wealthy
Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate taxes and to distribute assets to your heirs without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits.
6. Discussing your estate plans with your heirs is a good step to prevent future disputes or confusion
Inheritance can be an emotional and divisive issue. By being clear about your intentions while you are alive, you help dispel potential conflicts after you’re gone.
7. You can leave an unlimited amount of money to your spouse or dependent children tax-free, but this isn’t always the best strategy
By leaving all your assets to your spouse or children, you leave open the option that any partner that they become involved with can, on separation, qualify to receive a significant portion of the estate you have left them. Likewise, assets you will to them directly could be immediately seized if they are insolvent or enter into bankruptcy.
To find out more, please contact Fusion here or by phone on 1300 038 746. If you don’t already have a great solicitor to assist you in this area, we are happy to recommend some that are aligned to the Fusion ‘One Lens’ approach and could meet with you at our offices for your convenience.