“People do not plan to fail, but fail to plan”

While it is unpleasant to think of your death, it is of utmost importance that you plan the distribution of your estate.

Planning your estate involves more than just making a Will. It provides you with an opportunity to enhance the value of your estate, and to maximise the benefit of the inheritance of your beneficiaries, however big or small the estate may be. Estate Planning allows you to identify the potential pitfalls to your estate and maximise the benefit of wealth transfer.

A recent survey has given an insight into how well prepared older people consider themselves to be when it comes to estate planning. Perhaps unsurprisingly, it found that only around 40% consider themselves to be well prepared, despite a much greater number expressing a wish to leave as much of their estate as possible to their family or charitable causes.

The survey also found that more than a third of respondents don't take regular steps to keep their estate plans up to date. As a result, 25% said they were concerned that their estate will pay too much in taxes, or their heirs will challenge the Will or squander the inheritance.

"Proper planning is essential when organising your estate, whatever its size, particularly when you consider the added complexities that surface with family arrangements beyond the traditional nuclear one," said Jillian Bryan, an investment advisor and portfolio manager with TD Wealth Private Investment Advice. "An estate plan not only has obvious financial benefits, including minimising estate costs or taxes, but also can help ensure your wishes are clear and carried out as intended."

Recent figures suggest that as many as 45% of Australians do not have a Will. Even where Wills are in place, a substantial number of these are likely to be out of date and no longer reflect their personal circumstances.

Estate planning can appear to be a daunting prospect, but it is important to remember that help is available. The expert lawyers at Szabo & Associates Solicitors can help to guide you through the process, and ensure that your estate is protected and the benefits for your beneficiaries are maximised as much as possible.

No one likes to think about their own death, but preparing for this eventuality through effective estate planning can make it much easier for your loved ones should the worst happen.

Estate planning involves more than just making a Will. It can also allow you to identify the potential pitfalls to your estate and maximise the benefit of wealth transfer.

Part of this involves communicating your plans to your family. The consequences of failing to do this were highlightedin a recent report, which found that a lack of effective communication over estate planning could significantly increase the potential for conflict among family members after the death of a loved one.

The research, which was conducted by the BMO Wealth Institute, also found that not discussing estate plans could lead to other undesirable outcomes, including:

  • Unpleasant surprises after death of a loved one (42%)
  • Legal complications (37%)
  • Financial/taxation issues (33%)
  • Administrative complications (22%)

"The death of a loved one can be stressful for all concerned, and the anxiety can be exacerbated by a lack of understanding of the deceased's wishes regarding financial and personal assets," explained Dr. Amy D'Aprix, Life Transition Expert with BMO Financial Group. "Hurt feelings and damaged family relationships can be avoided by having the necessary estate conversations with family members and other intended beneficiaries while you're alive and well."

According to the NSW Trustee and Guardian, around 45% of Australians are currently without a valid Will; and this figure does not include those who haven't kept their Will up-to-date in changing circumstances. This would suggest that many of us need to start giving some thought to the future and putting our estate plans in place.

Listed below are the main benefits to making a Will and using other estate planning methods.

When you plan properly, your assets will be distributed as you would want them to – without an effective estate plan, this cannot be ensured.

If you structure your Will and estate plan properly, you can protect your assets from any legal or personal issues of your beneficiaries. For example, setting up a trust for a young person could protect from their inheritance being spent irresponsibly.

One of the main benefits to organizing your estate is that it can help ensure that assets are distributed in a tax-effective way, saving your beneficiaries money.

Planning your estate also gives you an opportunity to take stock of what you actually own. Many people find it useful and learn a lot about their assets through the estate planning process.

Planning your estate is also a good opportunity to look at what will happen if you lose capacity, and who you would like to take charge of your affairs. You can put in place other key estate planning documents such as a Power of Attorney or Power of Enduring Guardianship.

It is a concern for every parent, what will happen to my child if I die? However, this can be of greater concern to those who have a child that is incapable of managing their finances as a result of a disability.

If you have a child or someone close to you who has a disability, when updating your Will it may be beneficial to investigate whether you could set up a Special Disability Trust (SDT).

SDTs were introduced by the federal government in 2006 and can be a very effective way of providing financial security for a disabled child or loved one.

Family members, which can include: grandparents, step-parents and siblings, can put up to $609,500 as a gift in a SDT, this will go to the disabled family member tax-free.

An SDT is not means-tested. This means that the disabled person's disability support pension will not be affected by gifts into the trust.

The person who is to benefit from the trust is able to use the trust fund for medical expenses, home modifications, car modifications and also maintenance on trust-property assets.

The rules of an SDT also provide that the beneficiary can spend up to $10,750 per year at their own discretion. This may be on educational workshops, computers or therapeutic trips abroad.

However, SDTs can be difficult to establish. In order to be eligible for an SDT the beneficiary must have a severe disability. This would include those who receive a disability support pension, have immediate family members who qualify for carer's allowance and earn less than award wages or work fewer than seven hours per week.

Under the rules of SDTs, immediate family members may provide up to $609,500 into the trust and $500,000 of this may qualify for concessional treatment, this gives something of a "reward" to those who are caring for a disabled person.

The trust is particularly useful for parents who have adult children with a disability. Money that is gifted to an SDT can be deducted from the person's estate which may make them eligible for the aged pension.

Contact us

If you are thinking of contesting, making or updating a Will then it is important to seek expert legal advice as quickly as possible. Contact Szabo & Associates Solicitors today and speak with one of our specialist solicitors. Call us on (02) 9281-5088 or fill out an online enquiry form. 

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