Estate Planning: What’s the right strategy for you?

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Putting plans in place for the transfer of ownership or control of assets in the event of death is not a task many of us will willingly or enthusiastically engage in. Procrastination and hesitation are often at play when it comes to estate planning.

Furthermore, hastily putting a will in place when planning overseas travel, taking on a mortgage, or getting married may lead you to the conclusion that you’ve got your estate plan over and done with. However, there are several potential shortcomings with this approach.

The reality is that your financial circumstances, objectives, family make up and relationships change throughout your life and your estate plan should evolve accordingly. Additionally, a will may only play a small role in your broader succession plan.

So where do you begin your estate plan?

A good place to start is to establish where your assets sit in terms of ownership. A Financial Adviser is usually best placed to assist you with this exercise.

The next step is to establish your objectives so that the right assets go to the right people at the right time.

Case Study

Simone and Ben are retirees in their seventies. They have three children, two of whom (Richard and Samantha) are married with young children and the third (Julie) who lives with them.

The couple are worried because:

  • Richard’s wife does not get along with them nor her sisters-in- law, as she considers that Samantha and Julie have had extra assistance from their parents compared to her husband

  • Richard and Samantha are both concerned that Julie will be sole inheritor of the $3m family home

  • Julie is gradually taking on a carer role to her parents and believes that this unpaid work should eventually be rewarded when her parents pass away

In this type of scenario, the Financial Adviser helps Simone and Ben to identify the potential family conflicts that may arise when they pass away or become unable to look after their affairs.

The Adviser recommends pursuing a strategy whereby the size of their estate (if either were to pass away) is minimal, by arranging the appropriate beneficiary nominations for their $2m in super and pension accounts and double checking the family home is in joint names.

The Adviser also considers future scenarios for the couple, such as loss of mental capacity, aged care and the passing of the second spouse.

This means that when the time comes for intergenerational wealth transfer, there will be limited ability for the children to engage in expensive fighting with each other. The Adviser can continue to work with Simone and Ben to ensure that the wealth is fairly handed down to their children and grandchildren, rather than ending up in the hands of lawyers, the tax office or their son-in-law or daughter-in-law.

Conversely, if family dynamics had been harmonious, the Adviser could have recommended an alternative strategy to ensure that the bulk of Simone and Ben’s wealth passed to their estate to be future-proofed for their children and grandchildren.

This estate plan needs regular review to cater for changes in the family, such as new grandchildren, Richard or Samantha separating from their spouses or the death of Simone or Ben.

For more information, please contact your Financial Adviser.