Estate planning is an essential yet often overlooked aspect of financial planning. For many Australians, it is seen as something to be dealt with later in life, if at all.
However, estate planning should begin as early as possible to ensure a smooth and efficient transfer of assets to loved ones and to minimise the financial and emotional burden on them.
As soon as you turn 18 years of age, you can begin estate planning. The next best time to do it is now.
Not sure if estate planning should be your priority? Then read on as this article discusses the reasons early estate planning is crucial, regardless of your age or financial status.
Protect your loved ones
One of the most significant reasons for early estate planning is to protect your family and loved ones.
By drafting a comprehensive will, you can ensure that your assets will be distributed according to your wishes upon your death. This not only prevents potential disputes between family members but also ensures those who depend on you receive financial support.
It’s essential to review and update your will regularly, especially after significant life events, such as marriage, divorce, or the birth of a child.
Minimise tax burden
In Australia, inheritance is generally not subject to taxation. However, capital gains tax (CGT) may apply to certain assets that are transferred upon your death.
Early estate planning can help you implement strategies to minimise the potential tax burden for your beneficiaries. For instance, you may choose to distribute assets with a lower CGT liability or utilise superannuation contributions to minimise tax implications.
Avoid a lengthy probate process
When you pass away without a valid will in Australia, your estate will be distributed according to the laws of intestacy. This can result in a lengthy and expensive probate process, which can cause financial and emotional stress for your loved ones.
By having a well-drafted will, you can avoid a complicated probate process and ensure a more efficient distribution of your assets.
Appoint guardians for minor children
If you have minor children, early estate planning is vital to ensure their wellbeing in the event of your death.
By appointing a guardian in your will, you can ensure that your children are cared for by someone you trust, in line with your values and preferences.
Prepare for incapacity
Estate planning is not just about planning for your death; it also involves preparing for the possibility of incapacity.
By establishing an enduring power of attorney (EPA) and an advance care or health directive, you can nominate trusted individuals to make financial and medical decisions on your behalf if you become unable to do so.
These legal documents can provide peace of mind and ensure that your wishes are respected during difficult times.
Begin estate planning now
Regardless of your age or financial status, early estate planning can provide many benefits for you and your loved ones.
If you’re unsure about what to do, seek professional advice. Regularly review your estate plan to protect your family, minimise tax liabilities and ensure a smooth and efficient transfer of assets.
Don’t wait until it’s too late.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.
This information does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.