So you have completed your financial planning and it’s a good feeling right?
Your financial planning process may have involved decisions and changes about your home loans and mortgages, new investments, selling of existing assets or investments, insurance policies, your superannuation and savings management.
Now you know that you have prepared as best you can in your particular life circumstances to manage your future so that you enjoy a level of comfort and have a legacy to pass on to future generations.
But have you really completed the planning process? A valid will is the final piece of the financial planning process and will ensure your assets are distributed how you want them to and for your peace of mind.
If you have taken out a home loan to buy a new home or investment property or you have a home loan, how that mortgage is managed depends on your will.
If you don’t have a will and you die then you are said to have died “intestate” i.e. without a will. In this case, the government steps in and appoints an executor of their choice to distribute your assets including your home and other real estate according to a formula and process particular to the state you live in. The point here is that you don’t get a say and the division of your assets may not be what you would have wished for yourself.
Matters become even more complicated if you are divorced, separated or have a blended family and you die without a will as each State manages the status of defacto and spouse differently. A properly drafted Will avoids many of these complications.
You might be wondering what happens to your superannuation on your death?
Quite often superannuation is a person’s most valuable asset, however superannuation does not automatically form part of your assets in your Will, depending on which state you reside in. In most states, you need to have a binding death nomination with your superannuation fund.
A binding death benefit nomination is a written direction to the Trustee that sets out the dependants and/or legal personal representative that you want to receive your benefit of your superannuation in the event of your death.
If done properly, the Trustee must pay your benefit to the beneficiaries you have nominated in the proportions set out in your binding death benefit nomination. If you do not have a properly registered binding death nomination with your super fund, the trustee of the super fund will decide how and to whom any benefit should be distributed. The Trustee may decide to pay it into your estate for distribution according to your will.
What about financial planning and insurance policies?
The purpose of an insurance policy is generally to provide a cash benefit to someone nominated in the policy after you die. If you nominate a beneficiary then the proceeds of the policy with be paid directly to the beneficiary, however if you are the owner of the policy and the policy is silent as to a beneficiary then the proceeds of the policy will become part of your estate and will be distributed according to your will.
Preparing a will requires specialised knowledge but it does not need to be a complicated or drawn out process.
If you already have a will, changes triggered by your financial planning decisions may affect the validity of a benefit under your or the will itself, therefore it may be time to update your will.
You should also consider an Enduring Power of Attorney, (EPOA). This document allows you to appoint a trusted family member or friend to take care of your affairs in the event that you lose the capacity to do so yourself.
A solicitor will discuss options and your situation with you and your partner to ensure that a will is prepared that is valid and right for your circumstances. Keep a copy for yourself and tell family members and your executor where the original will is kept. If a will is lost it is deemed to be revoked. Keep all your personal papers in one place with an inventory and tell other people where to find them in case of emergency. A will should be revised regularly to take into account your own changing circumstances and those of your family members.
I’ve created a helpful checklist about what to take with you when you visit your solicitor about your will: click here to get your copy.
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Disclaimer: This blog is written to support business owners to consider legal requirements and issues that may arise in business. The information provided is for general and educational purposes only. It is not intended as legal advice for your individual circumstances. Please consult your lawyer for advice specific to you and your business.