The start of a new financial year is the perfect time to ensure your estate plan remains aligned with your current goals and intentions. Life is constantly changing, whether it’s through family dynamics, financial shifts, or legislative changes. Keeping your estate plan up to date ensures that your assets are distributed according to your wishes and protects your loved ones from unnecessary stress.
From reviewing your will to ensuring appropriate beneficiary nominations for your superannuation, this article outlines the key steps you should take to verify and update your estate plan this financial year.
Why Reviewing Your Estate Plan Is Essential
An estate plan is far more than a set of documents—it’s a roadmap for how your financial and personal affairs will be handled, both during your lifetime and after your passing. Circumstances in life evolve, including births, deaths, marriages, divorces, and significant financial achievements. If your estate plan remains stagnant while your life changes, the risk of unintended consequences grows.
Regular estate plan reviews ensure:
- Your wishes are clearly communicated and legally enforceable.
- Your loved ones are safeguarded from disputes or unnecessary legal complications.
- Your finances are structured efficiently, minimising tax implications and maximising benefits for your heirs.
Reviewing Your Will: The Foundation of Every Estate Plan
A will is the cornerstone of any estate plan, directing how your assets are distributed after your death. Despite its vital role, many Australians fail to revisit their will after initial drafting. Key questions to address include:
- Does Your Current Will Reflect Your Wishes? Life events—such as the birth of a child, the passing of a beneficiary, or changes in relationships—can render an old will ineffective or counterproductive. For example, if your will doesn’t account for a new spouse or children, they may be unintentionally excluded from your inheritance plans.
- Have You Appointed the Right Executors? Your executor is responsible for administering your estate according to your will. Ensure that the individual or professionals you’ve chosen to fill this role are still suitable, must be capable of managing complicated administrative tasks, and remain trustworthy.
- Consider Safeguards for Young or Vulnerable Beneficiaries: Including testamentary trusts can enhance the protection of your estate, especially for minors, beneficiaries with disabilities, or those susceptible to external risks such as financial exploitation.
Enduring Powers of Attorney and Guardianships
An estate plan isn’t just about what happens after you pass away—it also addresses how you want your affairs managed during your lifetime if you become incapacitated. Appointing enduring powers of attorney and guardians helps ensure your needs and values are respected, even if you are unable to communicate them yourself.
- What Is an Enduring Power of Attorney? An enduring power of attorney grants someone the authority to manage your financial and legal matters if you cannot do so. This could include paying bills, managing investments, or selling property.
- What Is an Enduring Power of Guardianship? An enduring power of guardianship allows someone to make personal, lifestyle, and health decisions on your behalf if you lose capacity. This could involve choices about your living arrangements, medical treatments, or daily care.
Importance of Superannuation Beneficiary Nominations
Your superannuation assets are typically not covered by your will. Instead, they are distributed according to your superannuation fund’s rules, based on a binding or non-binding beneficiary nomination. Ensuring these nominations are accurate and up to date is a critical part of estate planning.
- Check if Your Nominations Are Binding: A binding beneficiary nomination legally obligates your super fund to pay your superannuation death benefits to your nominated beneficiary. This is a powerful tool for ensuring certainty in the distribution of your super balance.
- Match Beneficiary Nominations with Your Current Wishes: Ensure that the beneficiaries listed—including your spouse, children, or other dependents—still align with your current intentions. Overlooked or outdated beneficiary details could result in benefits being paid to unintended recipients.
- Consider Tax Implications: Be aware that superannuation death benefits paid to non-dependents can be taxed. Structuring your estate plan to minimise these taxes will help preserve the value of your estate for your intended beneficiaries.
Other Areas to Review in Your Estate Plan
Aside from wills, powers of attorney, and superannuation, there are other components of estate planning that deserve your attention:
- Insurance policies: Does your life insurance payout structure align with your estate planning goals?
- Trusts: If you have family trusts, ensure they are administered according to your intentions and remain compliant with legal and tax obligations.
- Property Ownership Structures: Jointly owned assets may automatically pass to the co-owner, overriding your will. Ensure you understand how your property ownership is structured.
A Proactive Approach Ensures Peace of Mind
Updating your estate plan isn’t just a financial exercise—it’s an act of care for those you hold dear. By ensuring your will, enduring powers of attorney, and superannuation nominations align with your current intentions, you’re securing a legacy of support and clarity for your beneficiaries.
This financial year, make the time to revisit your estate plan. It could be the most impactful financial decision you make for yourself and your family.
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