Part 1 – What is an Estate Plan and why do you need one?
What is an Estate Plan?
An ‘estate plan’ is a plan for who will control your assets and enjoy income and capital from them when you die or lose capacity. A series of legal documents are then prepared to express and carry out that plan.
You may already have a will. Most have a simple will, where assets are left to the spouse then the children. Having a simple will is better than no will. But a good estate plan is much more than a simple will. There are other important estate planning documents, including:
– powers of attorney
– documents that ensure control of assets in superannuation, companies and trusts pass to the right people.
Why do you need an Estate Plan?
You need an estate plan to ensure your property and health care wishes are honoured and your loved ones are provided for. With poor estate planning, any one or more of the following usually go wrong:
– children fighting over who gets what
– assets going to children’s ex-spouses or creditors
– costly legal challenges to a will
– adverse tax consequences.
A comprehensive estate plan will be well thought out and set out clear legal direction about your wishes, to reduce the risk of the above happening.
When should you get an Estate Plan (or review your current plan)?
Most adults with any assets or children should have some form of estate plan in place. You should have one (or review an existing estate plan) when any of the following happen:
– becoming married or engaged, or start living with someone
– you (or your children) becoming separated or divorced
– further children or grandchildren
– there is a material change in your health
– recent special needs of your children or grandchildren
– your spouse or child becomes bankrupt
– you expect someone might challenge your will
– significant changes to your business or investments.
How is an Estate Plan created?
An estate plan is created with the help of a lawyer. Your lawyer will ask you several questions about your retirement goals and plans, and special requests for your family, including care for your children. Your lawyer will need a thorough understanding of your assets to figure out the best way to structure ownership and control of those assets.
A good estate planning lawyer will counsel you through a variety of issues and ask a series of questions that will help them understand your goals. They then:
– recommend an estate plan designed for you
– ensure you understand your options, the proposed plan, and how the legal documents work.
Find a lawyer you trust that will understand your needs and provide the necessary care and attention to detail. You may have an on-going relationship with them, to refine your plan in the future if things change.
As with anything of value, be prepared to spend more on a good estate plan than a simple will. What is being sold to you is certainty, family harmony, and potentially thousands of dollars in savings to your estate from litigation and taxes.
As a tax and commercial lawyer, estate planning has been a large part of my practice for over 12 years. I have helped clients achieve valuable peace of mind with:
– few assets or significant assets (i.e. complex business/ investment structures)
– families with estranged children and spouses
– blended families, e.g. step children and half siblings
– simple and complex control, income and capital distribution wishes.
If you have any questions or require further information please do not hesitate to contact Harry Giannakidis on hgiannakidis@millsoakley.com.au