Financially planning for death – How to protect your loved ones
Financially planning for death is just as important as managing your finances, if not more so.
It’s difficult enough for families to cope with the loss of a loved one. However, the added burden of dealing with the remaining estate can make an emotional time even more traumatic.
This is why drawing up a will is essential, regardless of your age and the state of your finances.
What happens if you don’t have a will?
If you pass away without a will, the law determines who can be appointed to administer your estate. It also decides how it will be distributed once debts are paid out.
Administrators have the right to make allowances for persons who might have been left out. This could result in a smaller share being provided to those you love the most.
Similarly, others may receive more than you would have otherwise wanted.
If you do have a will
Where is it?
It’s important that your original documents are stored somewhere that’s safe and accessible.
Most solicitors will store your will for you and provide you with a certified copy. It should be safely filed both digitally and in hard copy.
Executors and Powers of Attorney
An executor is the person appointed to administer the estate according to your wishes. They are an essential part of making a will.
An executor may be required to sell assets, complete tax returns and pay debts.
Your executor should be someone responsible and capable of undertaking such an important role. Especially in complicated cases where the appointment could be long term.
A Power of Attorney is not essential and is appointed in a separate document to your will. This person’s duties are only relevant during your living years.
A Power of Attorney is authorised to act on your behalf in financial or health matters, if you are otherwise unable to do so.
What happens after a death?
Your executor will need to apply for a Grant of Probate. This will allow them to begin administering your estate in accordance with the will.
An executor is entitled to obtain legal and accounting advice, to assist them throughout the application process. It may also help them deal with any tax implications for the estate.
Accessing the will
It is crucial that your executor knows where and how to access your will.
It’s a good idea to provide your executor with a copy of your will which will include the contact details of the solicitor storing it.
What about super?
Superannuation is usually not included in the distribution under a will. The superannuation legislation and requirements of individual funds dictate how it will be distributed.
Special clauses can be included if you wish to bring superannuation into the will. However, it’s a good idea to seek financial advice first to ensure there are no tax implications.
If there is a disagreement over the will, then legal representation will be required.
The best way to reduce the chances of a disagreement is to ensure your will is carefully drafted. Regularly reviewing and updating it to reflect your current circumstances is also important.
Creating a will ensures your estate is distributed according to your wishes. Also, it drastically reduces the stress and trauma for the family you leave behind.
Without a will, there’s no guarantee your loved ones – and your affairs – will be taken care of in the manner of your own choosing.
Source: Macquarie Group Limited