Estate Planning - More than just a matter of making a will - Part 1
Date: May 06, 2008
Authors: LAC Lawyers
Many people believe that by making a will, they’ve sufficiently planned for their death. This is a good start. A lot of people don’t do even that. Some estimates suggest that as many as half the people in Australia that die each year do not leave a formal will
[1]. Not surprisingly some people have a mental block about accepting their own mortality. Others accept that certain steps are necessary, but procrastinate over the form it should take. Still others just don’t care. If I had a dollar every time I heard someone flippantly remark “Oh they can sort it out between themselves when I’m gone”.
It’s a sad fact of life that we don’t get to choose when we go. When you die, unless you’ve properly documented what you want to happen, everyone who has a potential interest will have different ideas about what it is you intended should happen. Sometimes this will happen even when you have been clear about your wishes, but it will almost definitely be the case when you haven’t. Time and time again we see families hit by the double blow of having to deal with the grief caused by the loss of a loved one and also having to deal with the heartache and headache that comes with administering an estate. The fact is that it’s your estate and you have responsibility to ensure that you’ve planned things sufficiently. And while there are two certainties in life, death and taxes, proper estate planning can minimise the financial and emotional suffering caused by both on those left behind.
What is estate planning?
In a nutshell, the goal of estate planning is to make proper provision for what will happen to your affairs, including your assets, when you are no longer able to look after them yourself. The reason for your inability can be your death or loss of your mental capacity (eg. coma, severe dementia etc.).
Therefore an important part of estate planning involves executing a properly drafted and considered will. This addresses important matters such as who your assets pass to when you die, who is going to administer your affairs, and who is going to look after your children. But there is usually a need for more than that. Other important considerations include:
- Who is going to make decisions on your behalf if you’re unable to, such as consenting to medical treatment, deciding where you live etc.;
- Some assets, such as superannuation, often don’t pass according to your will;
- The effects any gift will have on the pension or other social security entitlements of your beneficiaries;
- Tax minimisation;
- If you own your own business, who is going to run it
How can a lawyer help?
An experienced succession planning lawyer will be able to help you to juggle the many and varied considerations which go into planning your estate and advise what’s best for your individual circumstances. The money you have to spend in lawyers’ fees are usually more than offset by the piece of mind you get in knowing you have made proper provision for your family when you’re gone. Also, many times, the savings you make by proper estate planning more than covers the lawyers’ bill.
[1] Renton N.E., Renton’s Understanding Estate Planning, 1st ed., Bas Publishing, Melbourne, 2007 at p67.
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