Simple Estate Planning Checklist

A checklist to help you take care of your family by making a will, power of attorney, living will, funeral arrangements, and more.

You may have heard that you need to make an “estate plan,” but what does an estate plan cover and how do to make one? Here is a simple list of the most important estate planning issues to consider.

Make a will

In a Will, you state who you want to inherit your property and name a guardian to care for your young children should something happen to you and the other parent.

Therefore, consider which option applies to your situation:

1. Wills for Individual
2. Wills for Spouses
3. Wills for Blended Families
4. Wills creating Testamentary Trusts

Consider a trust

If you hold your property in a Trust, your survivors won’t have to wait for the probate court, a time-consuming and expensive process.

For instance, consider using a Discretionary Trust as a mechanism of asset protection and consider using Testamentary Trust which provides a way for assets devolving to minor children to be protected until the children are capable of fending for themselves.

For more information please feel free contact us.

Make health care directives

Writing out your wishes for health care can protect you if you become unable to make medical decisions for yourself.  In other words, make Health care directives to appoint an Enduring Guardian and an Enduring Power of Attorney for health care, which gives someone you choose the power to make decisions if you can’t.

An Enduring Guardian is someone you appoint to make lifestyle, health and medical decisions for you when you are not capable of doing this for yourself. Your Enduring Guardian may make decisions such as where you live, what services are provided to you at home and what medical treatment you receive.

The appointment of an Enduring Power of Attorney formally gives another person, or persons, the authority to manage your legal and financial affairs. Depending on what you direct, this may include buying and selling assets, operating your bank accounts, and spending money on your behalf.

Make Enduring Power of Attorney

With an Enduring Power of Attorney for finances you can give a trusted person authority to handle your finances and property if you become incapacitated and unable to handle your own affairs.

An Enduring Power of Attorney will operate when a person can no longer make decisions or act on their own. However, an Enduring Power of Attorney cannot make lifestyle, accommodation or medical decisions and is limited to financial or property; only an enduring guardian can make lifestyle decisions on someone else’s behalf.

Protect your children’s property

You should name an adult to manage any money and property your minor children may inherit from you. This can be the same person as the personal guardian you name in your will.

Alternatively, you can appoint a property guardian, executor (will or grant of probate), administrator (under letters of administration) and trustee or setup a testamentary trust.

Binding Death Benefit Nomination

Superannuation is not an estate asset; on death it does not automatically flow to the estate of the deceased. The trustee of the super fund will generally pay a death benefit in accordance with the governing rules of the fund and relevant law. A binding death benefit nomination is a way to override this trustee discretion.

In other words, a binding death benefit nomination is a legally binding nomination that allows you to advise the trustee who is to receive your superannuation benefit in the event of your death. In order for a nomination to be binding, it must be ‘valid’. One of the requirements of validity is that only ‘dependants’ can be nominated. Depending on your circumstances, however, you can nominate one dependant or a number of dependants. For the purposes of superannuation law, a dependant includes:

1. a spouse (including de facto, opposite and same-sex)
2. children of any age (including adopted or ex-nuptial)
3. any person(s) financially dependent on the member
4. any person(s) in an interdependency relationship with the member (applicable since 1 July 2004)
5. a legal personal representative (LPR).

When binding nominations may not be appropriate?

As binding nominations require a formal nomination, much like a Will, and must be renewed every three years, or whenever your circumstances change, they may not be suitable for everyone. If certainty already exists, for example, where there is a sole dependant, a binding death nomination may be of little value.

Additionally, unless the person you nominate to receive your super death benefit is a dependant or your LPR at the date of your death, a binding death benefit nomination will not be valid. When a person does not meet these requirements, alternative estate planning arrangements will need to be made.

What about non-binding nominations?

A non-binding nomination, on the other hand, gives the trustee discretion to protect the interests of your beneficiaries if circumstances change. For example, if one of your beneficiaries is bankrupt, the trustee can take this into account and avoid putting your super benefit into the hands of creditors instead of your beneficiaries.

Consider life insurance

If you have young children or own a house, or you may owe significant debts or estate tax when you die, life insurance may be a good idea. This is not financial advice, you must obtain your own independent financial advice regarding this matter based on your personal financial circumstances.

Obtain estate tax advice

There are no inheritance or estate taxes in Australia.

When a person dies, generally the person responsible for administering the deceased estate is the legal personal representative. This person may be an executor or administrator who has been granted probate or letters of administration by a court.

When a person dies, there are some important tax and superannuation issues for the legal personal representative and others dealing with the deceased person’s tax affairs.

Speak to your financial advisor or accountant.

Cover funeral expenses

Set up within the Will to cover for funeral expenses. Generally, funeral expenses are paid from the Estate of the deceased and are handled by the Executor of the Will.

In addition, you can speak to your financial advisor relating to funeral insurance plan or bank to set up a payable on death account at your bank and deposit funds into it to pay for your funeral and related expenses.

Make final arrangements

Make your end of life care and wishes known including palliative care, advanced care plan, advanced care directive, organ and body donation and disposition of your body, burial or cremation.

Protect your business

If you’re the sole owner of a business, you should have a business succession plan.

Similarly, if you own a business with others, you should have a Business Succession Agreement with other partners to buyout the deceased persons interest in the business or have structures in place to maintain continuity of operations of the company.

Store your documents

Your legal representative and/or your executor (the person you choose in your will to administer your property after you die) may need access to the following documents:

1. will
2. trusts
3. insurance policies
4. real estate deeds
5. certificates for stocks, bonds, annuities,
6. information on bank accounts, superannuation funds, and safe deposit boxes
7. information on retirement plans, retirement savings account
8. information on debts: credit cards, mortgages and loans, utilities, and unpaid taxes
9. information on funeral prepayment plans, and any final arrangements instructions you have made.

Please remember you need to seek legal advice and understand the effective options available for estate planning to avoid problems for your family after your death. Feel free to contact us for more information.