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10 Pillars of Successful Retirement Planning

Proper planning precedes success. For a sensational holiday, we book early, research entertainment options and coordinate schedules. A memorable birthday party follows careful planning, invitations and gift shopping. What about a successful retirement? The ret.....

Wealth, Estate Planning - 5 min read

A strategic estate plan is an essential element in retirement planning. Are you comfortable with your estate plan? The following 10 considerations will help you to hone in on any weaknesses in your estate planning progress.

 

1.   Is My Will Up-to-date?

One of the most obvious estate planning considerations is making sure your Will is updated. Anyone who is over the age of 18 and has any assets should create a Will. Wills are fairly inexpensive to arrange, but they can make all the difference in how your estate is distributed after your death.

If you don’t have a Will, the state will decide how your funds and other assets will be distributed. This situation often leads to legal challenges from dissatisfied or estranged family members or other interested parties. As you can imagine, situations like these are long, difficult, and costly. It’s best to avoid these problems by creating a Will. 

With a Will, you can decide who will inherit your assets: cash, investments, property, vehicles, jewellery, art, and other possessions. You can also use your Will to tell your loved ones about your wishes for your funeral and burial or cremation.

 

2. Have I Designated Beneficiaries to My Investment Accounts and Insurance?

Your insurance policies, super account, and other investment accounts all let you designate beneficiaries to receive funds after your death. If you haven’t already done so, you should also set up a Death Nomination or Reversionary Beneficiary for your super account. Your super account isn’t automatically paid to your estate to be distributed according to the instructions you leave in your will, but this document will make sure it happens as you specify.

 

3. Have I Designated Legal Guardians For My Dependents?

This may be one of the most important things you do as you plan your estate. If you were to die tomorrow, what would happen to your dependents? Do you have a plan in place for them, including guardians who will care for them and funds for their upbringing and education?

 

4. How Will Taxes Affect My Estate?

Australia doesn’t have an “inheritance tax” per se, but that doesn’t mean your beneficiaries will be able to avoid other kinds of taxes. Inheritors are often hit hard with the Capital Gains tax, but there are things you can do with your estate planning to minimise the effects of such taxes. 

 

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For example, super fund benefits are tax-free if the beneficiary is a “Death Benefits Dependent” (child under the age of 18, spouse, former spouse, or interdependent relation). Depending on whom you designate as beneficiary, you could avoid taxes. There are also other ways to minimise taxes paid by your beneficiaries.

 

5. Do I Have An Enduring Power of Attorney?

Many people find that while they’re setting up their Wills, they also arrange for the creation of an Enduring Power of Attorney (EPA). An EPA is someone appointed to manage your affairs if you are incapacitated and can’t make decisions yourself.

 

6. Do I Have an Enduring Power of Guardianship?

Similar to an EPA, an Enduring Power of Guardianship allows someone else to make medical decisions for you in the event that you’re mentally unable to do so. Of course, this would have to be someone you trust implicitly and who understands your wishes and will carry them out.

 

7. Should I Create a Testamentary Trust?

A trust created according to your Will, a testamentary trust may help you to distribute your estate in a more tax-effective manner, and it can also reduce the risk of challenges to your Will. There are several types of trusts (discretionary trusts, special disability trusts, etc.), and the type of trust that’s best for you will depend on your goals, your family situation, and other factors.

Trusts can be especially useful if you have dependents who are under the age of 18. It designates a trustee to manage your beneficiaries’ inheritances until you would like funds to be paid out to them. Trusts may carry risks, however, especially of other parties make claims against the trust in court.

 

8.  Do I Need an Advance Health Directive?

An Advance Health Directive is another document you can use to lay out your wishes in case you are incapacitated and can’t make decisions for yourself. It allows you to express your wishes about medical treatment and how you’d like your body to be dealt with if you’re involved in an accident.

 

9. Do I Have a Trustworthy Executor

As a part of your Will, you’re required to name an executor who will carry out your wishes and distribute your estate. These duties can be extensive: collecting assets, paying debts, making sure benefits are paid to heirs. That’s why it’s so important to choose an executor you trust who is willing to manage this responsibility.

 

10. Have I Reviewed My Estate Planning with Experts?

An expert Wealth Management adviser can give you insights into your estate planning that will help you to further refine and safeguard your estate. If you haven’t talked through your plan with a Wealth Management specialist, give us a call at Altus Financial. We’ll be happy to answer your questions and offer any assistance you might need.

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