Last updated: July 2020
1. Why Should You Plan Your Estate?
Do you know what your family would need to do should you suddenly be unable to make decisions, require medical care or pass away?
When someone can no longer make decisions, needs care or passes away, families are left with all the work and plenty of difficult decisions.
Estate Planning allows us to think ahead and form a good idea about what we would like to happen to ourselves and our estate. A simple Estate Plan can support your family by relieving the burden of decision making, financial surprises and an unmanageable workload.
Read more about the following topics:
1.1. When an Estate Plan is used
We plan our estates to make sure our wishes are formalised and understood by our families, so that the necessary information is at hand when they need it. This could be to make decisions about our:
- health and medical treatment;
- lifestyle choices;
- aged care;
- financial affairs;
- legal affairs; and
- estate distribution.
It’s best we don’t leave anything up to chance as this may lead to unnecessary disputes among family members. Especially if they aren’t clear about or where different opinions exist about what we would have wanted for ourselves or our estate.
1.2. The Importance of Estate Planning
What your Family, Executor or Administrator would need to do if you’re not prepared:
- complete over 200 administrative tasks (find out what these are here);
- make over 200 decisions;
- work up to 250 hours of administrative work over an average period of 6-12 months;
- apply for Letters of Administration with the Supreme Court;
- spend on average $7,500 – $25,000 (excl. Funeral) to administer your estate; and
- pay funeral costs of $5,000 – $15,000 until funds can be reimbursed from estate.
Should something happen to us and we are no longer able to make decisions or pass away, our families will thank us for having an organised estate in place that is easily accessible.
1.3. Asset Ownership & Effects on Inheritance
Not all assets and liabilities automatically form part of the estate and hence may not be able to be transferred to anyone you choose, even with your Will.
Three types of asset ownership exist:
- Sole Ownership: Only assets owned by the person in their sole name will form part of the estate and can be managed through a Last Will & Testament.
- Joint Ownership: Any jointly owned assets with another person will generally transfer to the surviving joint owner.
- Tenants in Common: When assets are owned as tenants in common, the portion in your name would generally form part of the estate.
Superannuation death benefit payments don’t form part of your estate by default and this is further discussed in the fourth video about Financial Planning.