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You probably already have a sound financial plan in place to cater for your future needs. But do those needs include what will happen to your wealth if you were to die or become unable to make decisions about your finances? Estate planning is designed to cover for these eventualities.
What should an estate plan cover?
There are a number of things to consider when developing your estate plan. A comprehensive estate plan should take into account both your personal and your financial goals. For example, if you have a young family you may need to a trust to manage and distribute assets to your children.
You need to identify all your assets, including real estate, business or farm interests, investments, retirement plans, life insurance policies, personal property, art or other collections, cash and other personal valuables. Once you’ve identified these, you need to work out their fair market value. Your plan will consider legal ownership of the assets, their growth potential and liquidity and whether you want certain assets to go to specific individuals after you die.
Peace of mind
When you have an estate plan in place, you know your wishes will be carried out should anything happen to you. You’re also relieving your family members of the burden of making choices without your input.
A living will
You should also consider including a ‘living will’ as part of your estate plan.
There are two parts to a living will. The first is a written statement you make directly to your doctors/healthcare providers to outline the type of care you want (or don’t want) if you become incapacitated. This statement can be just a sentence or two, or be very specific about the kind of healthcare you want to receive.
The second is a power of attorney, which appoints someone you trust – your spouse, partner, relative or friend – to ensure you receive the type of care you’ve specified in your living will.
You will need to consider that the person you appoint may, in extreme cases, have to fight the medical establishment or your family members to assert your wishes. If you think there could be conflict, be sure to choose someone who is capable of fighting for what you want. They may also have to be prepared to be close at hand if you have a long illness, so they can be sure you get the treatment you asked for.
What if you don’t plan ahead?
If you haven’t made a living will, a family member or relative, close friend, the attending doctor, or a court-appointed guardian may be asked to make decisions on your behalf. Alternatively, a Public Trustee can be appointed executor in your will or family members can pass on their executor responsibilities to the Public Trustee.
To find out more about estate planning or to make a living will, we recommend that you seek legal advice. Alternatively, you can also speak to one of our financial planners at Intellichoice and they will be able to assist you in putting together an estate plan.
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