The problem we all face is when we don’t understand something or its relevance to our lives, it’s easier not to think about it.
Sometimes just not knowing where to start or where to go for advice can freeze many people into inaction.
Once you turn 18 years of age, you're your own responsibility under the eyes of the law. When it comes to your backup plan, you can let the government have a plan for you (and you may not like it) or you can choose to be in control of your own destiny.
Once you're 18, you're your own responsibility under the eyes of the law. You can let the government have a plan for you (and you may not like it) or you can choose to be in control of your own destiny. Putting your Plan B together is a key step to becoming life confident.
The 3 biggest mistakes people make thinking about a backup plan
- Thinking you're too young to need one,
- Thinking you have nothing of value to leave anyone,
- Thinking you will never get sick to the point where someone else will need to make decisions for you.
The crazy thinking is made crazier when people make the excuse for doing nothing by saying, 'I'm not planning on dying for a long time so estate planning isn't relevant for me...'
Nobody plans on dying.
You do have choices in your life, but you have to make them first.
The 15 most common symptoms your estate plan isn't sorted
Here are the 15 most common symptoms that indicate a family is dangerously unprepared for the inevitable.
1 Thinking you're 'too young for estate planning' or you have nothing of value to leave
Ask yourself these questions;
- What happens if you're the beneficiary in someone else’s will?
- What happens if you're injured in a motor vehicle accident and later receive an insurance payout? Without a Power of Attorney, if you can’t make decisions, what happens to the money, who will make the decisions for you? (and what if you don’t like their plans for you?)
- What happens if you pass away in a car accident and your estate later receives an insurance payout because of the motor vehicle accident?
- Without a Will, who gets the money? (probably a former boyfriend or girlfriend.)
Without a written estate plan, you have no control over what happens to you.
2 Forgetting that not all your assets are covered by your Will
Did you know that your superannuation is one of those assets excluded from your Will?
- Any benefit payable upon your death is distributed by the Superannuation Trustee in accordance with the Trust Deed.
Other assets not automatically controlled by your Will include;
- Life Insurances
- Superannuation
- Business interests
- Trusts, and
- Self Managed Superannuation Funds (SMSFs)
When it comes to property owned as tenants in common - if a tenant in common dies, their interest in the property may be distributed in accordance with the directions in their own Will. This means that does not automatically pass to the remaining tenant in common and can be left in someone else's will to another.
This means that the property does not automatically pass to the remaining tenant in common and can be left in someone else's will to another
3 Thinking people in an emotionally stressed state 'always make the best decisions
Our repeated experience is that people in an emotionally stressed state who have just lost a parent, friend or child do not automatically make the best decisions; especially when the situation is complex and new to them.
4 Ignoring past relationships, children and friends
Our past usually has a way of catching up with us if it's left unattended. This is especially relevant when it comes to claims on somebody's Will.
- If you don’t have a formal property settlement from a past relationship, it’s not settled.
- Past relationships (married, de facto or complex) usually have rights to claim against your estate.
If there is any chance of a child from a past relationship, you need to adjust your estate planning accordingly. Forgetting about possible children from past relationships is not an option when it comes to getting your estate plans sorted.
5 Expecting your family to ‘do just the right thing
This is probably the most common excuse that people make for not taking responsibility for their family and those they are responsible for.
Don't avoid your responsibility and expect your family to 'do the right thing'. The courts are littered with cases where the recently deceased failed to take responsibility forcing the courts to do so. Don't be remembered as the person who left an avoidable problem for others.
The facts are;
- Over 87% of all requests to leave money to charities in Wills are overturned by the family.
- The majority of benefits left for the sole purpose of providing for grandchildren are absorbed by their parents or intercepted by the family administering a Will.
Sapience has a solution to these problems so Contact Us today for a confidential chat.
6 Failing to nominate a Guardian for a minor child or failing to provide the money for the care and provison
You can use a life insurance policy to fund your wishes and make sure that a nominated children’s guardian has the financial ability to care for them. Yes, you can nominate a care guardian who is different from the financial guardian too).
8 Nominating unequal amounts to different people named in your Will, for no good or known reason
When you have assets of different value that you may wish to leave to different individuals in your Will, you can use a life insurance product to equalise the value of your estate.
Warning: Always be careful about bequeathing an asset to a family member where there is a debt attached to it and not providing for that debt as well.
9 Ignoring the current or possible future position of the beneficiary changing tax implications
You can leave a legacy to your children or if you're not careful, a tax burned as well. Part of good estate planning is trying to anticipate the possible future for a beneficiary and what might be happening in their world later so that you don't have any gift in a Will given to a future family court dispute, business creditors or bankruptcy trustee.
Part of good estate planning is trying to anticipate the possible future for a beneficiary and what might be happening in their world later so that you don't have any gift in a Will given to a future family court dispute, business creditors or bankruptcy trustee.
- Are they going through a family law court settlement?
- Do they struggle with addictions?
- Are they self-employed or in a specialty job where the risk of civil litigation is high?
- Are they experienced with large amounts of money? (If not consider the use of a trust to protect assets.
10 Thinking a business doesn’t need a Will
People in business, particularly people working with multiple business owners, and multiple family members, need special attention.
The statistical realities are that the more owners, key people, and investors you have, the greater the domino effect of a death or disablement of an owner of key person has on the entire business.
- Incapacity (loss of ability to think) might trigger the recall of capital loaned to the business, the freezing of existing credit facilities, a forced sell-off of the former owner's shares and interests in the company.
- Where there are multiple owners in a business, the family of the deceased owner may not share the same approach to risk and businesses that you have, and may even want to step into the company and change its direction.
If you're in business, in a Partnership or a Guarantor or Shareholder to a business, you need an additional level of assistance to get your estate planning sorted.
11 Using DIY thinking to the most important document you will sign
Gone are the days when a 'one-document-fits-all' approach can take care of a person's estate plans. Today life is more complex and the spread of chance is only increasing so a modern approach to estate planning is needed.
Australian Consumer Magazine CHOICE completed a comparison of four online and DIY Will Kits finding “…when drafting your own Will there are huge differences…’ and even CHOICE ‘recommends obtaining legal advice’.
12 Having witnesses to a Will who may also be beneficiaries or spouses of beneficiaries
When it comes to witnessing errors, the law is very precise about this and has no leniency.
Did you know: A Will can be considered damaged and invalid when evidence of an alteration or annexure is provided; so pinning, paper clipping or attaching a Post-it® note to the front of your will may invalidate it.
13 The Document Storage Dilemma
If you keep your Will and estate planning documents where you live, they can be lost when you move, changed by someone, or even used as scrap paper by a 2 years old looking for craft supplies. Estate planning documents are too important to risk filing at home or the office.
You should tell the right people that you have made a Will but what if they ask to read it or go looking for it when you’re not home?
Pro Tip: If you store a Will at home or in the office if you don’t check it from time to time, how do you know if it's been invalidated, lost, damaged or altered? Don't risk it, have estate planning documents professionally stored and make sure your Executor knows where your estate planning documents are stored and how to retrieve them if needed.
14 Failing to update
The one constant of modern life is constant change. As you sell and acquire new assets, you may need to update your plans.
As you take out and pay down mortgages, and business and consumer debts, your assets are typically used as security so assets also may not be sufficient to ensure provision for your beneficiaries.
Pro Tip: If you feel you're at a place in life where you don't yet have the funds you'd like to be able to leave a meaningful legacy, we often recommend taking out a quality life insurance product be used to ‘build something out of nothing’ while you're creating your wealth.
Unless you have designed your Will in consideration of future children, (a common fault in poorly drafted Wills) you need to update your Wills lest they be challenged as invalid.
15 Doing nothing
We sometimes judge others by their actions and ourselves by our intentions. Some decisions are too important to simply continue to put off.
Modern Estate Planning is about your Plan B for you, your family and those who depend on you.
The best way to predict your future is to plan for it and document it.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
