The benefits of having a Will
Where there is a Will, there is a way…
…of having your say. The number one objective for saving and investing is usually to ensure there is a degree of security or personal choices available later in life. Once you have what you need though, the emphasis then shifts to keeping it. Finally, thoughts turn to what to do with what’s left at the end of it all. This part of the thinking process is generally referred to as “estate planning”. It’s all part of achieving what you want and like every thing else in the financial world the more thought, preparation and time you give to this part of the plan, the more likely it is to achieve your objectives.
Correct estate planning should address a variety of issues, not just the basic will. For instance what is the most appropriate ownership of assets, are trust structures required for protection of assets for the children (or from creditors), in what instances (or areas of life) should other people have the power to represent your interests (either financial or personal) – can these decisions enhance your estate value and legitimately minimise personal tax?
Many people perceive that a will addresses all areas, and leave their planning at that. Many others don’t even get that far. The will is an essential planning component, and is a bare minimum requirement for all responsible adults. Those who don’t ever establish a will are effectively saying they don’t care enough to leave some basic guidelines for others to follow.
A common misunderstanding in estate planning is that if a person doesn’t have a will then the “State” takes the assets. Nothing could be further from the truth. The courts try very hard to determine “fair” apportionment of assets in the event of a person dying intestate (without a will). They have even developed guidelines that are generally followed in this event that take into account the relative importance (in society’s eyes) of say a surviving spouse and the surviving children’s requirements for assets. The problem of course is that this is not always what the deceased, or the estate, actually want.
So to have things work out the way you want, the first step is to actually work out what that is. Then do something about it. See a lawyer and make sure it is correctly prepared, and considers all the useful estate planning tools. Stationery shop toolkits at $30 each may be completed correctly, legally and quickly, but they won’t give you the added value advice that makes the real difference. And they may not be watertight either.
They won’t help you work through what sort of powers of attorney you should consider, or when. The relative merits (and disadvantages) of a trust structure for your situation really need personal discussion and consideration. Individual or joint property ownership decisions (of any sort) are difficult to work through without sound legal advice.
Good estate planning begins with a well drafted personalised will. It enhances the financial planning process, and creates more certainty for the future. It can reduce risks in the wealth creation process also.
This information is general in nature and should not be used as a substitute for financial advice. Always consult your financial adviser before making any financial decisions.