Many of us are happy to put time into planning the fun things – our next holiday, a new car or a dream home. But sometimes the tougher planning gets pushed aside. If you’ve got people in your life who you love and want to take care of, preparing an estate plan and will may be a good idea.

We’ve prepared some key points to think through when planning your estate, from how to prepare a will to how to decide who’ll be your beneficiaries.

What’s included in an ‘estate’?

No matter your age or life stage, you’ll probably have a variety of physical and non-physical assets or investments you care about. The things you value could be properties, cars and bank accounts through to more personal items such as jewellery, artwork and other specific valuables. Ultimately, anything you own that you consider has either monetary or intrinsic value can be included as part of your estate.

What’s not included in an ‘estate’?

While many assets and investments can be included as part of your estate, there are some things that can’t be included:

• Jointly owned assets – Any property or assets you own with another person can’t be included in your individual estate.
• Discretionary trusts, unit trusts and companies – Trusts and companies are normally considered to be separate legal entities. If you’re part of a family trust or are involved as a partner in a company, those assets would be part of your individual estate.
• Life insurance – While your life insurance is something specific to your estate, you’ll normally nominate who it goes to on the event of your death. Because it’s already attributed to someone, it won’t form part of your larger estate.
• Superannuation – Similar to life insurance, your superannuation balance is already nominated to one or more beneficiaries once you pass away.

Thinking about what’s included in a comprehensive estate plan can take a lot of consolidation. While you can do a lot of the initial work yourself, a solicitor, accountant or financial planner can help you work through the finer details.

Do I need a will?

One of the main tasks you’ll need to tackle when preparing your estate is creating a will. Put simply, a will is a critical legal document that outlines your wishes for how you want your assets and investments distributed after you pass away. There are many benefits of creating a will:

• You get to decide what happens to your wealth – A will allows you to have the final say in what happens to the things you care about after you pass away.
• It can protect your family (especially any young children) – As much as we’d like to, we can’t predict what will happen. If you’re a parent of young children, a will can help make sure they are taken care of.
• It may spare your loved ones a big tax bill – A will helps valuable assets be passed on from one owner to the next. Knowing what tax implications may be involved with some of your assets can minimise the tax obligations your beneficiaries may face.
• It can help minimise family squabbles – We’ve all heard stories of families being torn apart by disputes after the passing of a loved one. A will can help minimise the stress of different family members fighting over what happens to your assets.

Preparing a will helps those close know what to do when you pass away. If you die without a will or with one that isn’t valid, this is known as dying ‘intestate’. While each state and territory have different laws around intestate occurrences, the bottom line is you won’t have as much control over what happens to your valuables and possessions.

Perhaps more than anything else, a will can give you peace of mind, ensuring that your hard-earned and well-loved assets go to the people you choose.

How do I manage my beneficiaries?

A beneficiary can be anyone in your life – they could be a partner, family member, a close friend, neighbour or even an entity (eg a charity). It’s completely up to you how you plan your estate and choose your beneficiaries – you should never feel pressured or coerced to add someone to your will. While you have control over who your beneficiaries are, there are some important things to keep in mind when planning your estate.

Take care choosing an executor

Your executor is your go-to person to carry out the wishes in your will. When appointing someone to be your executor, make sure you choose someone responsible, who you trust to follow your instructions. While you can choose an executor from your beneficiaries, some people may prefer an executor who won’t personally benefit from the estate.

Do my beneficiaries need to know they’re in my will?

You don’t necessarily need to inform your beneficiaries of their entitlements in your will. It’s normally the responsibility of the executor to be open and honest with beneficiaries about what is in your will after you’ve passed on.

Know that your will can change

Just as your life is constantly changing, so can your estate and will. This includes the number of beneficiaries you include in your estate, and the way your assets are distributed amongst them. For example, if you have another child enter your life, you may think about updating your will to include them as a beneficiary of your estate. 

Published 3 September 2022