Do I need an estate plan?

May 31, 2022
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Article published by RJS Wealth Management Pty LtdIf you don’t watch daytime television, you may be surprised to hear that it is brimming with ads for funeral plans and life insurance. Depressing, isn’t it? And if you’re healthy, gainfully employed and have your whole life ahead of you, then there is plenty of time to put an estate plan into place… right? Sorry, WRONG! The reality is, death is an unpleasant fact. In fact, 147,678 deaths were registered in Australia in 2013. And they weren’t all as a result of old age.An estate plan doesn’t just mean having basic life insurance held in your super fund and a Will in your safe deposit box. (Especially in light of this sobering thought: Rice Warner Actuaries estimate Australians don’t have enough life insurance, resulting in a collective $1.37 trillion deficit!)So let’s take a look at what may happen to those who die without an estate plan:Jason approached RJS Wealth Management not long ago, never having put an estate plan in place. He does not have a Will or an executor (someone who carries out Jason’s estate plan). If Jason tragically left his family behind tomorrow, it triggers these painful questions while his family is grieving:Where does his financial legacy go?Jason has two young children, one from a previous marriage to Sarah and one in his current marriage to Petra. His assets are likely to legally flow to his existing wife Petra, leaving his first wife Sarah with nothing to support their child in the future. It’s worth noting that the average cost to send two children through public school and an undergraduate degree is estimated at $537,000. Without a Will, one child could miss out on the opportunities Jason had been working on providing.A Will solidifies where assets are allocated, and to whom. In a variety of scenarios, the Will carves up Jason’s assets and cash holdings.Did you know that Jason’s superannuation and associated insurances will not form part of his estate? These assets require beneficiary nominations to direct the Trustees of his super fund on how he wished the funds to be distributed.How can he take care of both children if the unthinkable happens?Jason can make sure he looks after both children by including a testamentary trust trigger in his Will. Jason could instruct the Executor of his estate to set up a testamentary trust to distribute the trusts income for the benefit of his two children. Jason may also add a provision to his super fund and set up a dependent child pension, so Sarah and Petra will receive income distributions from his superannuation and life insurance.What if Jason is injured?An estate plan isn’t simply a document that’s looked at upon a person’s death. Jason may be seriously injured and no longer able to make decisions for himself. With an Enduring Power of Attorney in place, his appointed trusted person/people can deal with financial matters in the event Jason is incapacitated. His estate plan may also include a health directive, communicating his wishes on medical matters. (ie. In the case of cardiac arrest, providing instructions to resuscitate or not)Ask yourself: is your Will up to date?Major life events such as the birth of a child, marriage, divorce – not just in your immediate family, but in the life of anyone who stands to benefit from your estate including executors and trustees of the testamentary trust. Your estate plan should be reviewed after any major life event. Understand where every asset and source of income, such as superannuation, flows and to whom at every stage of your life.A solicitor should prepare your Estate Plan and have it witnessed by appropriate parties to:

  1. ensure your wishes are clearly documented
  2. reduce the likelihood of your family contesting the Will and erupting in a feud that could turn sister against brother, parent against child.

A financial planner can review your levels of insurance to make sure you have enough cover to clear debts, provide replacement income to those who survive you and cover any other substantial costs you had planned.Luckily we helped Jason put a comprehensive estate plan in place before something happened to him. Don’t leave your estate distributions to luck, contact a RJS Wealth Management Professional on 1300 256 526 and make sure it is all taken care of. Now that would be a relief!Source: blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

June 1, 2022

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