We don’t like to think about our own mortality, but planning for the inevitable can save your loved ones a lot of heartache and financial stress. At Virtuous Wealth, we believe estate planning is a fundamental part of comprehensive financial planning.
Let’s look at three key areas of estate planning that need your attention and practical solutions to ensure your wishes are followed.
The Hidden Complications of Superannuation Distribution
Many Australians are surprised to find out that their superannuation doesn’t automatically form part of their estate. In most super funds, the trustee has discretion over who receives your super benefits and any associated life insurance when you die. While super legislation requires the fund to pay your dependents, the definition of “dependents” may not align with your wishes.
This can create unexpected outcomes, especially in blended families. For example, a divorcee who wants to leave their super to children from a first marriage may find the trustees allocating a portion to their former spouse instead.
Our Solution: Implement a Binding Death Benefit Nomination (BDBN) with your super fund. This legally binding document tells your super fund trustees exactly how your super should be paid out, so your wishes are followed rather than leaving it to the discretion of unknown trustees.
Dying Without a Will
Dying “intestate” (without a valid will) means your assets will be distributed according to state legislation formulas rather than your personal wishes. This one-size-fits-all approach rarely aligns with most people’s intentions for their wealth.
We’ve seen this play out tragically in real life. Take the case of a 27 year old who was killed in a car accident with $95,000 in life insurance through her super. Without a will or dependents, her estate was split equally between her natural parents, even though her father had been absent since her early childhood, which was certainly not what she would have wanted.
Our Solution: Create a comprehensive, legally valid will that specifies your wishes. Review and update it regularly, especially after major life events like marriage, divorce or the birth of children.
Ensuring Quick Access to Funds for Your Dependents
The probate process can be lengthy, potentially leaving your dependents without access to necessary funds when they need them most. Additionally, if potential beneficiaries challenge your will, the distribution of assets can be significantly delayed.
This creates immense stress for families already dealing with grief. Without proper planning, surviving spouses or dependents may face financial hardship during a period when they’re least equipped to handle additional stress.
Our Solution: We recommend a multi-faceted approach:
- Keep all important documents in a safe place and tell your executor where to find them
- Consider setting up a life insurance policy with nominated beneficiaries that pays directly to those beneficiaries upon death without going through your estate
- Keep comprehensive records of all assets and accounts to simplify the administrative burden on your executor
Get Started Today
Estate planning isn’t just for the wealthy or elderly – it’s for everyone who cares about what happens to their assets and loved ones after they’re gone.
Our experienced advisors at Virtuous Wealth can help you navigate these complex issues with care and expertise. We’ll work with you to create a comprehensive estate plan that gives you peace of mind and financial security for those you love most.
Contact our Newcastle office today to book a confidential appointment about your estate planning needs. A small investment of time now can save your loved ones a lot of stress and ensure your final wishes are followed.
