Estate planning is like your plan B for life. It means if anything unexpected happens, you’ve got a strategy in place that ensures your finances are protected and wishes followed. 

While thinking about worst case scenarios can feel a little morbid, it can also be a very insightful exercise that gives you peace of mind.

What exactly is an estate plan?

An estate plan is a set of legal documents that outline what happens to your money, property, and responsibilities if you pass away or can’t make decisions for yourself anymore.

Usually there are several key elements of an estate plan:

✅ A valid will: Outlines how your assets will be distributed and who is responsible for managing the things you own.

✅ Enduring power of attorney: Appoints someone to manage your finances if you lose the capacity to do so. 

✅ Enduring guardianship: Appoints someone to make medical and lifestyle decisions on your behalf if you lose capacity to do so.

✅ Superannuation nomination: Your superannuation portfolio is not automatically included as part of your estate. To ensure your super goes to your intended beneficiary, you need to make a ‘binding death benefit nomination’ through your super fund. 

Why should you have an estate plan?

Let’s be real… accidents and sudden poor health can happen to anyone, regardless of your age or how much is in your bank account. 

Depending on the circumstances, sometimes it can be too late to communicate who you want as the decision makers in control of your health and finances. 

If there’s no plan to outline how your assets will be distributed on your passing, it can be extra difficult for your loved ones to manage during a time that’s already distressing. 

Not to mention, there are several tax considerations when it comes to passing on assets to loved ones. 

Having an estate plan means you can work with a professional to ensure your assets are transferred in the most tax efficient way possible - saving your loved ones a lot of stress (and potentially money)!

Who needs an estate plan?

If any of the below criteria applies to you, it’s worth considering an estate plan. 

⭐ Owning a home or investment property

⭐ Having a superannuation and/or investment portfolio

⭐ Being in a de facto or married relationship 

⭐ Having children or dependents

⭐ Owning a business 

If you don’t prepare your own estate plan, you risk decisions being made according to default laws in your state… which might not align with your wishes. 

How to get started?

Okay, now that you understand why it’s important to have an estate plan. How do you get started?

1. Evaluate the assets you own. Not just the obvious stuff like property and savings, but also valuable keepsakes, special artwork, and anything that might be valuable to you and your loved ones. 
2. Evaluate what you owe. Home loan? Credit card debt? Loan from your parents? Think about how these should be managed if you can never work again or if you pass away. 
3. Identify who you trust to make medical, lifestyle and financial decisions on your behalf. It doesn’t have to be the same person, you can split responsibilities across different people.
4. Seek professional advice from legal, financial and accounting professionals. These people can offer you guidance on the best way to create an estate plan that best suits your personal circumstances. 
5. Review your plan regularly. As life changes (e.g. if you get married, have children, buy and sell property) your plan will also need to change to reflect your current situation to make sure it remains valid. 

Estate planning isn’t just for your parents and millionaires - it’s about being proactive and protecting what matters most to you and your loved ones. So don’t leave it up to chance (default laws)!

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