4 Reasons Why You Need An Estate Plan

Before we investigate the reasons you need an estate plan, we first need to answer the question: What is an estate plan?

Essentially, it is a plan for how assets and wealth will be distributed after death. Your plan can also include who will care for your children and make decisions when you can’t.

Now, onto the reasons you need an estate plan, even if you don’t think you have enough assets to need one.

1.     You decide

The foundation of having an estate plan is that you decide where your assets go. If you die without a will, called ‘dying intestate’, then the laws of intestacy will apply. This means that your assets will be distributed in a pre-defined manner.

This can cause a range of problems, especially where blended families are involved. Dying intestate also leaves the gates open for family to dispute the distribution of the estate. This may not be because any one person wants “more”, but what if your spouse knew you wanted your kids to have the family home, but the laws of intestacy require that it be sold and the proceeds distributed? The only remedy they have is to challenge the estate and go through the court process. This can cost a lot of time and money. Not only can you decide where your assets go, but good planning can also prevent such costly court processes.

2.     Reduce conflict

Even a tight knit family will be under a lot of stress after the death of a family member. They’ll already be bombarded with paperwork and many decisions they may not want to make. The more decisions a family needs to make the more likely they’ll disagree about at least one. However, just as a will can help your family avoid court, so too can a will help them avoid conflict. You can put your wishes on paper in black and white. You can make a scary time easier on them by thinking about the difficult questions now and planning ahead.

3.     Tax, tax, tax

You’ve worked long and hard to build something to leave behind. By properly planning your estate you can avoid unnecessary tax as well as allow flexibility if unexpected tax does arise.

In Australia we don’t have specific estate tax. However, the people who you pass your assets to will have to pay tax. For example, an investment property might push your spouse up a tax bracket but leaving the property to your children on trust won’t.

Further, if one of the equal shares you left to your two children is reduced by an unexpected tax, a good estate plan can allow the executor to re-distribute the assets to make the shares they actually receive, equal.

4.     Protect your children

The final reason you need an estate plan is the most important: your children! Within your estate plan you can appoint someone to care for your children if you pass before they’re 18. You can also appoint backups and provide for how and where your children will be raised.

Bonus: an estate plan can also protect you before your passing. By appointing a Power of Attorney and Enduring Guardian, you have control over who can make legal, financial, and health decisions if you become incapacitated.

Ready to prepare an estate plan? We are here to help you create a meaningful and effective estate plan. Contact us at The Estate Planning Centre (office@theestateplanningcentre.com.au) or make an online booking here, to arrange a consult with one of our estate planning lawyers.