Estate planning is an often neglected but important part of your financial plan. An estate plan is about more than what happens with your assets after you die. It is also concerned with the way you structure your assets while you are still alive. Check to ensure you have taken care of the following essential elements of a proper estate plan. Otherwise you put your assets at significant risk of depletion and also risk disappointing your family.

Firstly, You Need a Valid Will

A will is simply a legal document that states who should receive your assets after you die. Approximately half of Australian adults do not have a valid will. That means when they die the government gets to decide what happens to their assets after death and almost certainly means unnecessary costs will be charged to the estate.

Avoid a DIY will as you will miss out on valuable guidance on how to minimise the effect of taxes on the sale of any assets and other important elements of your estate plan. It's worth spending money on a lawyer or estate planning expert in this area. It is simply foolish not to have a will so if you don't have one get one today.

Testamentary Trust

Also known as a 'will trust', a testamentary trust is an excellent way to protect assets and provide tax effective distributions to minors. A trust is simply where a person (trustee) manages assets (trust property) for the benefit of another person or group of people (beneficiaries). You should certainly consider using a testamentary trust if any of your intended beneficiaries are minors, disabled, gamblers or drug addicts or because you don't trust their spouse or de defacto. It provides flexibility and control over how your assets are be distributed and is most useful where minors and vulnerable persons are concerned.

Powers of Attorney

This document allows another person to act on your behalf in specified circumstances such as travel, illness or disability. There are general powers of attorney and enduring powers of attorney which are useful should you become incapacitated because of physical or mental illness. A power of attorney can cover your medical, personal and financial affairs. To make sure your wishes are carried out in the event you become incapacitated, make sure you have an enduring power of attorney.

Death Benefit Nomination

Superannuation does not generally form part of your estate so will not be part of your will. You can however make a binding nomination on how your superannuation assets are to be distributed upon your death. Most people do not have a non-binding death benefit nomination which means the trustee is not obliged to follow their wishes, so check with your fund on how you can make the nomination binding.

Here are the key points:

• check that your will is valid and up-to-date and contains provision for a testamentary trust
• make an enduring power of attorney
• make sure your superannuation death benefit nomination is up-to-date and binding

There are other important strategies you might to consider depending on your circumstances such as a provisions for guardianship, setting up a family discretionary trust or self-managed superannuation fund. Put your personal and financial affairs in order by setting up an estate plan. Consult a professional on how to protect your wealth without delay.

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