Planning for the future
From writing a will to setting aside money for a funeral, future-proofing your finances now is something worth thinking about.Posted: July 26, 2022
- When it comes to estate planning, there are things you can do now to make things more straightforward for your family.
- The safest way to ensure your wishes are executed smoothly is to seek professional advice.
- Start planning now. The sooner you start, the better equipped you’ll be for the future.
Thinking or talking about end of life can be a difficult process and is often something we put off. But having a plan in place that gives direction to your loved ones when you pass can be incredibly helpful.
Planning ahead also gives you some sense of control over what will happen with your finances and your funeral plans once you’re no longer around.
Often small administrative details, such as the passwords to your social media accounts, who you have appointed as the executor of your will, or whether you’ve prepaid a funeral, can be difficult to find out if you haven’t notified your family.
Thankfully, there are things you can do now to make things more straightforward for your family.
There are some steps you can take now to get the process started. According to Anna Hacker, National Manager of Estate Planning at Australian Unity Trustees Legal Services, the safest way to ensure your wishes are executed smoothly is to seek professional advice.
“People often assume they can look things up for themselves, but the reality is that there are so many moving parts when it comes to making sure your finances are in order,” she says.
“Without advice, people can end up with a will that isn’t structured in the most tax-effective way, or they gift assets they don’t own, such as a home they’ve sold or a business asset that isn’t theirs to give.”
Particularly in cases where beneficiaries have a disability, it’s critical to understand the impact your gifts might have on their social security status. Anna explains, “Inheriting half a million dollars could cut off someone’s access to a disability pension. The last thing anyone would want to do is negatively impact their beneficiaries by not getting the right advice.”
Reviewing your will every three years – the period after which lapsing binding death nominations in certain superannuation funds will end – will ensure it still suits your circumstances over time, taking into account events such as divorces, births or deaths in the family.
Nominating the ‘right’ people for power of attorney or executor roles is also imperative, Anna says, to alleviate any animosity that may arise if one family member is given control over another’s finances.
“Choose someone who can look objectively at the needs of your beneficiaries,” she suggests. “Your family can focus on the important task after your passing, which is being together.”
While it isn’t necessary to give loved ones a copy of your estate-planning documents, they should know where to find them.
For this purpose, it can be helpful to create a ‘life admin’ folder, in which you explain where the original copies of documents are held and list any assets, such as insurance policies, bank accounts, real estate titles and investments, as well as any unpaid debts. This way loved ones can easily access all the information they require to settle your affairs.
A life admin folder is also the ideal place to specify instructions for your funeral. In Australia, the cost of funerals can range from $4000 for a basic cremation and up to $15,000 for a more elaborate burial.
You may choose to set aside funds, whether by creating a term deposit or savings account, or by purchasing a funeral bond (independently managed investment products that are released upon the death of the account holder) or a prepaid funeral.
Though Anna is seeing a growing movement towards ‘low-fuss’ send-offs, she explains that even a basic wake can run up a sizeable bill.
“Loved ones want to make sure they do the right thing by someone who has passed away, but funerals can be expensive,” she says. “Certainly, a product such as a funeral bond can help to alleviate any stress.”
As for when to instigate planning, Anna believes there’s no time like the present, adding, “The sooner you start, the better equipped you’ll be for the future.”
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