Why estate planning is women’s business - Women's Agenda

Why estate planning is women’s business

When artist Pablo Picasso died at 91 he left millions in assets.  Aside from his artwork he also had five houses, bonds, gold and cash.

But because he died without a will it took six years and tens of millions of dollars for his estate to settle and the assets to be divided among his six heirs.

You may be no Picasso, but to your family you are likely to be their world. If you pass away without a will, they may be forced to wait a very long time for your estate to settle and during this time fees may be eating away at their inheritance. 

As women, we make the time to do just about everything, but when it comes to planning what becomes of our worldly possessions and how our loved ones are looked after when we die, I’ve heard just about every excuse in the book. 

Topping the list is this old chestnut, “I’ve been meaning to do it for ages but I’ve just not gotten around to it, I’ve just been so busy!” and many variations of this line.  It always falls to the bottom of the to-do list.   

When death happens suddenly, or where no estate plans are made, a family can be left to deal with a financial and logistical nightmare at a time when they are grieving.

Estate planning is something that just can’t wait, so here are some important steps to take:

1. Take responsibility and take action

As most women outlive their spouses, on average living five years more than men, it is often the woman whose final will determines what happens to a couple’s estate. It’s not uncommon to leave it up to a significant other to sort out the will, but it’s actually in our best interest to lead the charge and stay actively involved and fully on top of finances and estate plans. If you’re single then obviously the job is yours! In any situation, all women need to be taking steps today to make sure they have an up-to-date will in place.  It’s especially important to review your will if your personal circumstances have changed, such as after a divorce.   

2. Get your important documents together and keep them in a safe place

When someone dies it’s often the grieving relatives who have to locate all the important documents, such as a copy of the will.  It can be like finding a needle in a haystack if the person has not been organised. At the very least, set up a file including all important documents and don’t forget to let your relatives know where to find it. Take it a step further and photocopy your documents and store them at a different location. Some other important documents should include a document listing all your account numbers and passwords, your superannuation and insurance details and your house deeds.

3. Talk to a financial planner and a lawyer

Preparing your will the wrong way – or not having one at all – could cost your family thousands of dollars. If seeing a financial adviser it’s best to do this before seeing a solicitor to arrange a will.  This is because advisers can help you maximise your estate through superannuation and personal insurance to ensure their dependants are financially taken care of should an unforeseen event occur.  Once your estate is maximised, a solicitor can assist with ensuring your wishes are carried out and your estate is executed according to your wishes. 

4. Consider your superannuation

Don’t assume superannuation is automatically part of your estate.

If you choose to do nothing and don’t nominate a beneficiary, your superannuation and any attached life insurance is likely to be distributed at the discretion of the super fund trustee. They may pay the proceeds directly into your estate or they may distribute directly to other beneficiaries.

Having the funds included as part of the estate, without an expertly written will, increases the risk of money falling into the wrong hands if the estate is challenged.  To ensure superannuation benefits are paid directly to a beneficiary and not included as part of your estate, you could consider providing a valid binding death benefit nomination directly to your super fund.  To set this up call your financial adviser or fund and tell them you would like to discuss making a binding nomination of beneficiary.

Be aware that some funds don’t offer the option of binding nominations and in this instance you need to use other tools for estate planning depending on your personal situation and circumstances.

5 Consider if a trust is right for you – they’re not just for the rich

To provide additional protection of your assets, a testamentary trust might be an option.  Put simply, this is a trust established by a will.  Rather than estate assets being distributed upon death, some or all of these assets would remain in this trust for the benefit of a specific group of beneficiaries named in the will.  There may also be tax advantages in having a testamentary trust due to the flexibility available to ensure, for example, that more income is distributed to children – as income is distributed to children at adult tax rates.

Let’s say a mother leaves a sum of money to her son or daughter, who later separates from their spouse, the Family Court in a divorce settlement may rule that the spouse is entitled to a proportion of the inheritance.  The risk of this may be reduced if the assets had been left to the children in a trust.

Estate planning is just as important as planning financially for other stages in your life, such as marriage, starting a family or retirement.  After all, why work to create wealth only to see it dissipated by not planning for its distribution after your death?

While only a qualified practitioner can legally draw up a will, a financial adviser can help you navigate your way through the complexities of estate planning and provide a framework for ensuring all considerations are covered when mapping out your final wishes.

 


 

Jenny Cattach is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.  Any advice given is general only and has not taken into account your objectives, financial situation or needs.  Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.

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