Advivo outlines why estate planning for your business is essential for your retirement plans.
First published: December, 2017
Updated: November, 2023
Estate planning is far more than writing a will and binding death nomination or other legal documents. The important part of estate planning is understanding how and where you want your estate distributed, including your superannuation, and ensuring the correct documentation is put in place to make sure that happens across all entities in your business structure, recognising past, present and future family status, and allowing for any taxation consequences that may arise. As providers of estate planning services in Brisbane, we outline what estate planning is, and its necessary components.
What Is Estate Planning?
Estate planning is defined differently depending on who you ask, but can be described as developing a strategy to deal with your assets after you die – the legal instruments and structures, such as a will, you put in place to transfer your assets in the event of death.
This can often be put to the bottom of the to-do list by business owners. Generally, anything that is related to death is something we do not want to talk about, as is the subject of how we are going to split up our estate. Unfortunately, not talking about it or, even worse, doing nothing about it just makes it harder when the time finally comes. We all know someone personally or a friend of a friend who has suffered in the event a family member has suddenly passed. This is always a difficult time, and without a will or estate plan, it can hinder the grieving process and cause unnecessary stress to those close to the deceased.
Here are the necessary components that you need to include in your estate planning…
The Will
The will can protect your estate and the interest of your beneficiaries in the event of your death. There is a misconception that the will covers all, but superannuation, for instance, is not necessarily dealt with by the terms of the will. Did you know that your will is revoked or canceled if you get married unless it is made in contemplation of marriage? Divorce does not revoke a will, but it cancels any provision in favour of the former spouse.
Enduring Power of Attorney
Another important part of your estate plan to consider is an enduring power of attorney. This allows you to give your attorney the power to make financial decisions, and personal or health decisions if you lose the capacity to make decisions for yourself. An enduring power of attorney allows you to plan for the unexpected, such as an accident or physical or other illness. A financial attorney is responsible only for financial matters, including receiving income, paying bills, taxation and contractual issues, investment and financial planning, legal actions, or property management. The final type of attorney is a personal/healthcare attorney, and they may make decisions such as where you live, who you live with, and daily issues like diet and dress and giving approval for you to receive certain types of care.
State Legal Process in Absence of a Will or Estate Plan
If you don’t have a will or estate plan, all states have a legal process in place for determining who will inherit the property of a person who fails to make a valid will through each state’s intestacy laws (an heir-at-law is anyone who is entitled to inherit from someone who dies without leaving a last will and testament.) Probate is typically required when someone dies without a will.
