What is Estate Planning and Why Do I Need to Do It?

If you’ve ever heard the term ‘estate planning’ before, you may be wondering what it involves, as well as if it’s something that applies to you. At the end of the day, estate planning allows you and your loved ones to have peace of mind in case something was to happen to you. Therefore, it’s a vital activity that every adult should take the time to do—sooner, rather than later.

Here’s everything you need to know about estate planning, including what it entails and how you can start this process as early as today.

What is Estate Planning?

Estate planning is the process of determining the best method to manage your financial and personal affairs while you are still living so that you are taken care of throughout your lifetime. It also ensures that your assets are distributed according to your wishes upon your passing.

The instruments used to implement the plans devised as part of the estate planning process include wills, powers of attorney, powers of guardianship, and insurance and superannuation nominations. Without an organised strategy in place, however, these papers won’t likely result in the most effective and efficient solution.

Why is Estate Planning Important?

In the case of your passing, it’s vital to give serious thought to your assets, the people you wish to leave them to, their needs and situations, prospective claims, who would make the best executor and trustee, and most significantly, the goals you have for the transfer of your money.

Estate planning is crucial for many reasons. Most importantly, it allows you to:

  • Designate someone to act on your behalf (including a Medical and Financial Power of Attorney) if you become unable to make choices for yourself
  • Determine what insurance and superannuation assets will be included in your estate
  • Protect your assets and receive tax advantages by utilising trusts or other arrangements
  • Safeguard dependent family members, including young children or loved ones with special needs
  • Ensure the fair distribution of wealth among children of a first marriage, if you have remarried later in life
  • Explain the plans you have in place for a seamless transfer of your company interests

Who Needs an Estate Plan?

While many think that you need to be elderly or wealthy to create an estate plan, this isn’t true. Simply put, anyone over the age of 18 will benefit from estate planning.

Even if you don’t have a lot of assets, having an Estate Plan ensures that everyone knows what your preferences are. Health directives and long-term healthcare requests are great examples of this. If you become incapacitated and unable to communicate your choices, your Estate Plan will speak for you, so your loved ones don’t have to make difficult decisions or speculate about what you might want.

How Can You Ensure Effective Estate Planning?

Now that you know just how vital estate planning is, you might be wondering how you can ensure your estate plans remain effective.

Your estate planning needs should be evaluated every few years or if your circumstances change significantly. Most importantly, this includes regularly reviewing and altering your Will when necessary.

Estate planning shouldn’t be left until it’s too late. We recommend consulting a legal estate planning expert for guidance in order to create an appropriate estate plan for you.

If you or someone you know wants more information or needs help, please contact us at (03) 9422 5439 or email laurie@irvinelawyers.com.au.

Looking for a Wills and Estate Lawyer in Melbourne? We have lawyers in South Morang and lawyers in Warrnambool ready to help you.