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Feb 08, 2018 / News

Financial Planning

Estate Planning: Getting the Basics Right

It is an unfortunate fact that although most people understand the fundamental importance of estate planning, it is an area of financial management that is often neglected.  Why?  Is it because people don’t like talking about death? Are they a bit confronted by their own mortality? Do they not want to tempt fate? Or is it all “just too hard”?  Whatever the reason, it is vitally important for everyone get the basics done right.

Will

Unless you want strangers involved in your estate management and complicating your family’s affairs, you must have a valid Will.  There are simple Wills and there are complex Wills – the type that is applicable for you is dependent upon your personal circumstances.  When there is no valid Will, the process can be long and expensive – not only in dollar value (e.g. Court fees, Public Trustee costs), but it can also be a difficult emotional journey.  

A Will should provide instructions in relation to all your assets and the entities that you control. Special consideration is required in regard to family trusts (which are also called discretionary trusts), private companies and self managed superannuation funds.  Blended family situations always require special attention.

Whether an existing Will is a valid Will depends on various factors.  One of the most notable being that unless a Will has been made in contemplation of marriage, it is automatically invalidated by the act of marriage.

Enduring Power of Attorney/Enduring Guardian

This is called different names in different states, but this is the document that stipulates who can make decisions for you when you are unable to make them for yourself.  Every adult should have one and it should include a second choice nomination, if your first choice person is unable to assist for any reason.  This document can eliminate the need of having a loved one making applications to the Court to be formally appointed to manage your affairs.

Binding Death Benefit Nomination (BDBN)

Your superannuation entitlements are not automatically part of your estate.  Making a BDBN is an extremely important step in securing where your superannuation benefits go.  Insurances can substantially increase superannuation benefits – don’t leave this decision to someone else (e.g. the Trustee of your Super Fund).

Self Managed Superannuation Fund (SMSF)

Many Australians hold a substantial proportion of their wealth inside their own SMSF and it is vitally important to ensure that control of the SMSF cannot be hijacked by one individual to the detriment of others (e.g. where control may go to one sibling who then pays all benefits to themselves at the expense of any other siblings). 

Insurance Inside Superannuation 

Using your superannuation fund to hold life insurance cover (including Death cover and some types of Total & Permanent Disablement cover) can be an extremely cost effective and tax effective method of ownership.  However, it is important that an expert review and advise you on the type of policies held in your fund.  For example, in the event of a claim due to trauma/critical illness, access to the benefits to help you in a time of great need may depend on the type of policy held. 

Insurance in General

It is extremely important to ensure that you have the correct level of insurance cover for your needs.  There are some types of cover that should generally not be held inside super.  You need to be aware of the emotional and financial stress that is caused when the insurance cover is either inadequate or held in the wrong entity.

How can Edwards Marshall Financial Solutions help you?

Estate Planning is a highly personalised process that must cover many different aspects in order to be done correctly.  There are also many different documents (some of which are mentioned here) that may need to be reviewed, replaced or altered.  Having expert advice and assistance can give you peace of mind that your plan is the right fit and appropriate for your personal circumstances.  Please contact Steven Wild to ensure you have protection and security for the assets you have worked hard for. 

Despite the general aversion to estate planning, getting the basics done right is vitally important or the estate could end up in Court (where the only people smiling will be the lawyers)…

About us

EMFS was formed in 2001 originally to service the financial planning needs of the clients of Nexia Edwards Marshall, Chartered Accountants. In addition, we now service clients referred by other accounting firms, lawyers and clients who are not serviced by Nexia Edwards Marshall. We manage funds totalling about $250m on behalf of clients.

Liability limited by a scheme approved under Professional Standards Legislation. Contents of this publication are general of nature and are not intended to be used for decision making purposes. Edwards Marshall Financial Solutions Pty Ltd ABN 45 096 434 842 is an Authorised Representative of Edwards Marshall Advisory Pty Ltd ABN 18 600 878 555. AFS Licence No. 479 792.