3 ways to protect your family after you’ve gone
If you were to be run over by the proverbial bus tomorrow, would your grieving family be forced to suffer even more because of tricky financial issues?
Estate planning can be as simple or as complex as your portfolio of investments and assets. But with a little thought and care, you can ensure that your family or other beneficiaries are not left with a mess to deal with.
Here are three things you can do right now to start getting your affairs in order.
1. Write a Will
This is the easiest step but the most overlooked. An estimated 50 per cent of Australians die without a Will, which may create a problem for loved ones left behind.
Without a Will, your assets will be distributed based on the laws of the state or territory you live in and may go to family members you are estranged from.
Beware of the DIY Will kits available from newsagents, they may be suitable only for those with the simplest finances. If you own assets jointly or if there is any dispute between your beneficiaries after you’ve gone, much of your estate may disappear in legal fees.
If you jointly own a business, a Will is crucial. In fact, all partners should ensure that each has a Will so that the business can continue if one partner dies. A Will is also vital if you are the sole director and shareholder of a business. Without it, your family may be tied up in legal wrangles to take control of the business or, if there are no close family members, the Public Trustee may take control. Either way, it’s likely the business will be forced to close until the legal issues are resolved.
Once completed, keep your Will up to date. A quick review every year or two will ensure that there are no surprises after you’ve gone.
2. Think about life insurance
Life insurance helps to provide financial security for your family when something happens to you. For example, it could pay out an existing mortgage on the family home or take care of other debt.
Death and disability insurance cover can be purchased through your superannuation fund and is sometimes provided by default, for a fee. There are advantages for some people to buy life insurance through their super fund, but for others there can be disadvantages. Your financial planner can advise the best course of action for your circumstances.
3. Check your super details
Your super fund will decide who receives your death benefit, unless you let them know your preference.
There are different ways to do this. A ‘non-binding nomination’ gives the super fund trustee a guide when distributing your benefits. But a ‘binding nomination’ legally requires the trustee to pay to the person or people you name.
These three simple steps will help to see your wishes are carried out when you die. Check with your financial planner to make sure that your estate planning is in place and appropriate for you.
If you don’t currently have a financial planner, visit our Find a Planner tool to find one near you.