What is your 'estate'?
Your ‘estate’ includes everything you own – your ‘earthly possessions’, if you will. It can include for example cash, property, cars, boats, furniture, jewellery, family heirlooms, art, shares and more.
What is estate planning?
This is where you decide what will happen to your belongings after you pass away. By leaving a clear set of ‘instructions’, you help make sure that the people you care most about aren’t faced with any unnecessary conflict or uncertainty.
Why is estate planning important?
Even if you don’t have much money or property, planning your estate is the best way to make sure that special belongings go to the people who will treasure them. Often, it’s these items that matter most.
Why an estate plan is a good plan
- Your assets get passed on to beneficiaries that you choose. If you pass away without a valid will (and in turn, without a valid estate plan) you're considered to have ‘died intestate’ and your assets get distributed according to your state's inheritance laws—not your wishes.
- If you leave kids behind, you decide who cares for them and how—not the courts
- You minimise the tax your beneficiaries may pay when they inherit your assets
- You reduce the risk of conflict between family and friends when you pass away.
What's in your will?
Your will is a legal document that's part of your estate plan. It outlines how you want your estate to be managed and how you want your assets to be distributed when you pass away.
If you have a fairly straightforward estate and know how you’d like to distribute it, you can easily write your will yourself. It's as simple as buying a will pack from Australia Post and select news agencies, or downloading it online.
For more complicated estates, it might be a good idea to get advice from a solicitor or the Public Trustee. You can then appoint them to be your executor.
Your will checklist
Your will should:
- clearly identify your beneficiaries
- clearly identify your executor
- have the right date on it
- be signed correctly
- be witnessed correctly
- list exactly how you want your estate to be distributed to your beneficiaries (including any plans if they pass away before you)
- be up to date.
Should you review your estate plan?
Life is never predictable, so it’s a good idea to update your estate plan when things change.
Why you might change your estate plan
- You get married
- You get divorced
- You have kids
- Your partner, dependant or loved one passes away
- You experience financial hardship.
Other things to consider
Organising life insurance and a funeral plan can make things easier for your family later. Learn the ins and outs of life insurance, or find out about estate planning in more detail with ASIC's Moneysmart guide.