Have you thought of what will happen to your assets when you pass away? Everything you own forms part of your Estate and will be distributed in accordance with your Will (if you have one).
A common misconception that individuals have when they think about Estate Planning is that all my assets – (be it in the name of individual, trust, company, superannuation) go into one pot called “My Estate”. Talking to a lawyer or specialist, you may realise that some assets do not form part of your Estate and others get transferred directly to your nominated beneficiaries when you pass away.
Regardless of your personal circumstances, death is inevitable. Having a good Estate Plan is important because it ensures that your living dependents are looked after and in accordance to your wishes. Otherwise, it may go pear-shaped like the famous long-running Estate litigation involving Australia’s richest person, Gina Rinehart where she lost control of a $4 billion family trust in 2015.
Then the next question is who requires an Estate Plan?
In Australia, the Baby Boomer generation (born 1946-1966) represents 24% of our total population with an intergenerational wealth transfer equal to $2.4 trillion. Wealth gets lost when there are disputes in the wealth transfer process and Estate value being diminished by the significant legal fees paid to defend the Estate’s position.
Another topical issue is the growing number of blended families. It has been said not to expect your families to meld together overnight or expect to stick together when you pass away. Potential arguments may arise between the surviving spouse and children, between the children themselves or combination of both.
This may give rise to family claims provisions against the Estate assets. Whilst family claims provisions cannot be avoided entirely, a good Estate Plan can help to mitigate the financial loss and risks.
Have you considered your minor children in your Will? You may like your minor children to be cared for until they graduate or turn a certain age. However, it may be many years before they are financially independent which creates a lot of uncertainty.
The above illustrates the different circumstances in which an Estate Plan is needed. Estate Planning is not age centric but is certainly an issue for those aged 50 years older or have blended families.
Speak to one of our trusted advisors at Leaders who can guide with the Estate Planning process.
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