Mar 08, 2022  | Tags: estate planning

Our insights

Estate planning is like visiting the dentist – we all know we should do it but we keep putting it off.

The reality is, it is one of the most important things you will ever do.

That’s why it is so critical to get advice from an experienced financial adviser to ensure that all of your bases are covered. Taking shortcuts is loaded with pitfalls.

Here are some of the bigger mistakes people often make, so you can avoid them.

“I’ll do it later”

No-one knows exactly when that fateful day is coming and while some may get a warning, many others have none.

Don’t put off until tomorrow what you can do today.

Your loved ones will have enough to deal with after your gone without the added stress of government red tape and potential financial hardship because you didn’t prepare your estate.

Sound of mind

It’s another taboo subject but a reality of life that estates need to be planned while you are of sound mind. Dementia-causing diseases affect around 10% of people over the age of 65 and can strike quickly. Part of estate planning is assigning a trusted person or people to make decisions on your behalf, if you can’t. This is a key part of the process.

Family Feud

Survey says the top answer is this: nothing brings out the worst in people like an estate to fight over.

If you leave any loopholes or doubts about your intentions, that happy family might find itself scrapping over your hard-earned dollars in court.

This is particularly important if you’re going to exclude any close family members from your estate.

A detailed plan and explanation will leave the chance of a legal challenge far less likely.

Don’t underestimate

You may think you don’t own much and employing the services of a professional to help draw up formal papers is a waste of time and money. Nothing could be further from the truth.

Try making a list of everything you own – property, shares, superannuation, cars. It adds up quickly.

And regardless of the size of your estate, whoever you bequeath it to will have a much easier time after you’re gone if your estate has been properly planned.

Keeping it up to date

Even after you’ve planned your estate, your circumstances may change. New relationships, new acquisitions, maybe even an inheritance of your own can substantially change your position and this needs to be reflected in your Will.

It’s worthwhile reviewing your estate every year or two to ensure the following are all up to date:

- Life insurance beneficiaries

- Superannuation assets and beneficiaries

- Assets held in trust 

- Company assets

- Jointly held property 

Hidden traps

Even if you get all the above right, there are still plenty of mistakes people make when trying to plan their estate on their own. Some of these include:

Debts – If you haven’t specified that these must be paid from your estate first, one of your beneficiaries might be left well out of pocket.

Signing your life away – It seems obvious, but if you forget to sign your will, your entire estate may end up in the wrong hands. 

Superannuation – Behind property, superannuation may be your second biggest asset. But it is subject to complex laws which if not properly considered, may significantly dilute its value. 

Trusts and companies – They can hold significant assets and they should be considered in every well-prepared estate plan.

Testamentary trusts – These provide multiple asset protection and taxation benefits and can ensure your wealth stays in your family. They offer loved ones protection from creditors and divorcing spouses long after you’re gone.

De Facto relationships – Even a short-term de facto partner can have a significant claim on an estate if it hasn’t been considered. Careful planning can guard against an “ex” from becoming a factor.

Hey big spender – Sometimes not all desired beneficiaries are mature or stable enough to cope with a big inheritance at once. There are mechanisms that can be put in place if you are concerned that one of your loved ones may waste their good fortune.

Get advice today

Leaving your estate to your nearest and dearest is too important to do by half.

It’s important you get the best possible advice from both an experienced financial planner and estate planning lawyer to ensure your estate is safe and secure, and that your legacy will play out as you planned.

Contact us today to get started on your journey.

This article is written by James Herriman at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.

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