Estate planning is developing a strategy to make sure your assets are distributed according to your wishes after you die. A comprehensive estate plan makes sure the assets you own or control are dealt with in a way that minimises tax, protects your family and preserves your legacy after you die.
As well as preparing your Will, our role is to help you understand how your assets and entities will be dealt with when you die or lose capacity and to prepare the documents you need to carry out your wishes.
What’s involved in estate planning?
Most people are aware they should have a Will, but a Will is just one component of an estate plan.
A Will sets out who receives your assets when you die. Estate planning is much broader than that and may involve:
- establishing testamentary trusts for asset protection, for example on relationship separation or bankruptcy or for tax minimisation;
- creating an Enduring Power of Attorney to appoint a person to act on your behalf in relation to property and financial matters if you lose mental capacity;
- creating an Enduring Power of Guardianship to appoint a person to make personal, lifestyle and treatment decisions on your behalf if you lose capacity to make those decisions yourself;
- restructuring your ownership of assets;
- obtaining advice about family provision (challenges to a Will) and developing a strategy to avoid potential disputes; and
- developing succession strategies for companies, trusts, businesses or other entities you control.
What can a good estate plan do?
Having an estate plan is among the most important things you can do for the people you leave behind. A good one can:
- help you provide for your family and make sure your assets pass to your intended beneficiaries;
- help you make plans for your children’s care, including by appointing a guardian;
- minimise estate expenses;
- help your loved ones make difficult decisions by documenting your wishes;
- minimise tax; and
- protect your assets from a future relationship breakdown or bankruptcy or from spendthrift beneficiaries and beneficiaries with drug or gambling problems.
What does your Will not cover?
When it comes to estate planning, your Will is just the beginning; and this surprises most people! Your Will doesn’t cover your superannuation, jointly owned property, assets you control in another entity, or what happens if you lose capacity.
Superannuation. Your super usually isn’t part of your estate, so your Will generally can’t give it away. The fund decides who receives it unless you’ve made a binding death benefit nomination. See Estate planning trap no. 1 – superannuation.
Jointly owned property. Property held as joint tenants passes to the surviving owner automatically, outside your estate and outside your Will.
Assets in a company, family trust or SMSF. You may control them, but you don’t own them, so your Will can’t deal with them. Your estate plan must deal with who takes control after you die – and usually this is done outside your Will. See Estate planning for your related entities.
Anything happening while you’re alive. A Will operates only from the date of your death. If you lose capacity, it does nothing at all. See EPOA and EPOG in WA: who makes decisions if you lose capacity.
Who needs an estate plan?
Everybody needs a Will, but not everybody needs a full estate plan.
If you own a home and have some savings, your family gets on and there’s nobody who needs protecting, a Will with an Enduring Power of Attorney and an Enduring Power of Guardianship will usually cover it.
Estate planning becomes the right conversation where any of these apply:
- you own or control a business, company, family trust or SMSF;
- you’re in a blended family or you have children from an earlier relationship;
- a beneficiary has a disability, an addiction, a bankruptcy risk or a shaky relationship;
- you want to leave someone out or leave unequal shares;
- you have significant superannuation, life insurance or assets in another state; or
- you expect your Will to be challenged.
What happens at an estate planning consultation?
At your estate planning conference, we’ll work out what you actually own and control, which is more involved than it sounds once companies, trusts and super are in the picture. The goal is to make sure that control of each entity will pass to the right people when you die or if you lose capacity. At your first meeting, we’ll take the time to understand your objectives so we can help you to achieve them.
After the first meeting we’ll give you a tailored quote to produce a comprehensive written estate plan that sets out the succession arrangements for each person and entity. As part of this advice, we’ll review all the documents that make up the entity (trust deeds, constitutions, etc) and advise you whether they meet your objectives, or if they need to be changed to fit your needs.
Frequently asked questions
Is estate planning the same as making a Will?
No. A Will is one document within an estate plan. The plan also covers what happens if you lose capacity, what happens to assets your Will can’t reach and how to protect an inheritance once it passes.
When should I do my estate planning?
While you have capacity. After that the options narrow significantly and may require a court application. You should review your Will and estate plan every three to five years and after any significant life event to make sure they stay current. See How often do I need to update my Will?
Can estate planning stop my Will being challenged?
Nothing stops an eligible person bringing a family provision claim, but a comprehensive estate plan, including asset restructuring if needed, can make a claim harder or less worthwhile. See Estate planning trap no. 3 – disinheriting a family member.
Do I need a testamentary trust?
It depends on what income your estate is likely produce and on who will inherit it. A trust adds tax flexibility and protects an inheritance from a beneficiary’s divorce or bankruptcy. See Everything you need to know about testamentary trusts.
What happens if I do nothing?
You die intestate. A statutory formula divides your estate between your relatives, but the succession of your related entities will depend on the terms of their own documents. See What does it mean to die intestate?
Talk to us about your estate plan
If a Will is all you need, our fixed prices are published on our Wills service page.
For anything involving a business, a company, a trust or an SMSF, we start with an estate planning consultation and give you a tailored quote afterwards.
Contact us for an estate planning consultation or call the Wills team on (08) 9220 4433.
This article is general information and not legal advice.
