With a good estate plan you can feel assured that everything is legally in place to carry out your wishes and look after the people closest to you. It’s an essential part of planning for the future and it’s never too early to get started.
Key points:
- An estate plan is a legal plan that carries out your wishes when you’re no longer here or can no longer make decisions.
- There are three important estate planning documents, but you don’t need all three:
- a will
- a power of attorney, and
- an enduring guardianship or medical/health care directive.
- Super is not automatically included in your will. To include it, you will need to leave it to your estate by nominating a beneficiary. This tells us who to pay it to.
What is estate planning?
Estate planning looks at your personal, family and financial circumstances to create legal documents that will:
- Carry out your wishes when you can no longer make decisions, or you die.
- Look after the people closest to you.
- Make sure your assets go to the people and places you want them to.
- State your clear intentions. This way, there is no confusion about what you want. It can also reduce the chance of disputes or unintended outcomes.
Estate planning is much more than having a will. It’s all about your wishes and the choices you make for your future.
Estate planning can be complex and challenging, but a good plan can make a big difference. These important legal documents will help. And while it’s a good idea to make all three, it’s up to you to decide which ones you’d like to make.
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| Will | Power of attorney | Enduring guardianship Medical/health care directive |
|---|---|---|
Choose who will manage your estate and who you want to leave your assets to when you die.
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Choose who will manage and make decisions about your financial affairs. In some states and territories, a power of attorney can also make decisions about personal, lifestyle and health affairs. |
Choose who you want to make decisions about your medical and personal affairs, if you can’t make these decisions while you're alive.
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What makes up your estate?
Your estate consists of your assets and liabilities.
The assets may include your house, car, savings, or shares. These assets may be in your name only, or in joint names with someone else, or in a legal entity such as a company or a trust.
The liabilities may include your mortgage, car loan and credit card. These liabilities may be in your name only, or in joint names with someone else.
A will gives you the best chance of making sure your assets go where you want them to. If you die without leaving a will, the laws of intestacy apply. The rules of intestacy are made by the government and set out who is entitled to receive your assets.
Certain assets and liabilities are not automatically distributed in accordance with your will or under the rules of intestacy.
These include:
- your super
- assets and liabilities you own with someone else
- any private companies or trusts.
That's why it’s important to understand what assets you own, how you own them and what happens to those assets if you die.
What happens to your super when you die
Super is an asset that isn’t automatically included in your will.
Your super fund will pay your super to your nominated beneficiary. You can nominate your spouse, your children or anybody financially dependent on you.
You can also nominate the executor of your will as your beneficiary. They are required to distribute your super according to your will.
Nominating a beneficiary provides peace of mind that your money will go to the right people when you die.
To include your super in your will, you should nominate the Legal personal representative of your estate as the beneficiary of your super. That way, your super is paid out as per your instructions.
You can also nominate your spouse or partner, children or anybody financially dependent on you as a beneficiary. But only the Legal Personal Representative of your estate is required to distribute your super according to your will.
If you don’t nominate a beneficiary, your super fund may decide who gets the payment, regardless of what you have in your will.
Common estate planning terms explained
The law around estate planning is different in each state and territory across Australia. This means that the names of some legal documents, roles and decisions which the people you nominate can make, will vary.
As estate planning terminology can be confusing, here’s a glossary of some common phrases to help you.
A legal document that sets out who you want to manage your estate and who you want to leave your assets to when you die.
Who you appoint in your will to manage your estate when you die.
Who you appoint in your will to hold and distribute property on behalf of someone else, such as a beneficiary, in accordance with your will.
Who you appoint in your will to look after any minor children.
Who you nominate in your will to receive any of your assets.
A legal document that sets out who you want to manage and make decisions about your financial affairs (and in some states and territories, health affairs), while you’re alive.
A power of attorney that only has effect while you have capacity to manage your affairs for yourself.
A power of attorney that only has effect if you lose capacity to manage your affairs yourself.
Who you appoint in your power of attorney to manage your financial (and in some states and territories, health) affairs while you are alive.
A legal document that sets out who you want to make and the types of decisions you want them to make about your personal, lifestyle and health affairs while you are alive and if you lose capacity to make them for yourself.
Who you appoint to make your personal, lifestyle and health decisions while you are alive and if you lose capacity to make them for yourself.
A document that sets out your specific wishes, goals, values, preferences and directions about your future medical and health care treatment.
Another term for a medical/health care directive and advanced
health care directive.
The trustee of your super fund.
A valid binding nomination means that your super fund is legally bound to pay your super (and any insurance within super) to who you have nominated.
A non-binding nomination means that the trustee of your super fund decides who to pay your super (and any insurance within super) to and who you have nominated is just a wish or an indicator of who you would like the super to be paid to.
A trust is any situation where someone holds property (money and/or other assets) on behalf of someone else, such as a trustee in a Will holding money in trust on behalf of a beneficiary until they reach a certain age.