Life doesn’t always go to plan. While logically we know that, most of us don’t plan for the worst – it’s all a bit too morbid and time-consuming to think about.
The downside of not planning can be disastrous though. Your hard-earned assets could be squandered, money that could have been distributed in accordance with your wishes may be handed over to the Government and the potential for family fall-outs is very real. And if you’re a business owner, the stakes are even higher.
As a population, planning is more important than ever because:
- The demographic is ageing – 1 in 7 of us are now aged 65 and over (3.8 million);
- The baby boomer generation represent only 25% of the population, but hold 55% of the wealth;
- We are entering a period of intergenerational wealth transfer from the baby boomers;
- Over the last 25 years there has been an explosion of wealth in Australia.
Estate planning is simply identifying your assets and liabilities, and what you want to happen to those assets if something happens to you. As part of that, you need to look at issues that might arise, and how best to manage them. All of this is then reviewed for tax outcomes and legal requirements to provide the best care and protection for your beneficiaries.
If you’re a business owner, you also need to consider what would happen to your business if you’re unable to continue in your current role, and whether your beneficiaries would be able to take their share of the value in the business. This planning will protect your beneficiaries, the business and your business partners.
Estate planning doesn’t have to be hard work, but it does have to be planned.
It’s also important to understand that actual wealth, or the size of your estate, is not the sole reason for estate planning. Estate planning is important for:
- the care and maintenance of minor children;
- managing the respective rights and expectations of beneficiaries, particularly with blended families;
- avoiding disputes between family members;
- relationships outside of the immediate family;
- managing liabilities of the estate;
- assets which may not be capable of immediate realisation, or where value will be diluted by realisation;
- the transfer of assets through generations.
Estate planning seeks to not only distribute the assets of your estate, but to do so in a way that protects the estate, addresses issues within the estate and fulfils your wishes.
What the stats say
Whilst Australia enjoys one of the highest life expectancies of any country in the world at 82.5 years (ranked fifth among 35 OECD countries in 2015), and 4 in 5 of us rate our health as ‘very good’, the reality is that 50% of Australians have a chronic condition that is likely to cause their death.
Leading causes of death differ by age:
- 1–44 years: suicide, land transport accidents
- 45–74 years: coronary heart disease, lung cancer
- 75 years and over: coronary heart disease, dementia and Alzheimer disease
It’s estimated that:
- 138,300 people were diagnosed with cancer in 2018 (while 48,600 died from it);
- around 45% of Australians will experience a mental illness in their lifetime;
- a whopping 63% of adults are either overweight or obese;
Bottom line? Everyone should have a valid Will in place. And if you own a business, have children from a previous marriage, have a Self-Managed Super Fund or other complex financial issues, you really should consider putting a more comprehensive plan in place. But whatever action you take, just take some – procrastination won’t help your family if something happens to you!
Our friends at Gant Legal specialise in the preparation of Wills and Estates. If you need an expert hand, simply email Beth or call her on 0422 199 453 to talk through your circumstances or to organise a home visit.
“Think getting your personal affairs in order is difficult? It’s a tough conversation to have, sure – but ensuring your personal affairs are in order & your family is looked after if (God forbid) you were to pass away, is absolutely crucial. The convenience of having our estate planner, Beth from Gant Legal, come to our home, explain important aspects of will preparation and get all the relevant estate planning documents sorted, made the whole process so much easier than I thought it would be. I really encourage you to think about it – have you got a will? Is it up to date? Does it take into account your wishes? Do yourself a favour and let Beth help you get your affairs in order too.” – Ashley Ross, Ross Group Director