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Estate planning dos and don’ts: A practical approach to protecting your assets

While it’s not necessarily a happy topic, estate planning is an essential part of managing your assets during your lifetime and ensuring your wealth passes on to your loved ones after your death. Taking action today to organise your estate will not only give you financial security, but it will also guarantee that your final wishes will be carried out.

Unfortunately, it’s not top-of-mind for most people, and many overlook or delay their planning until it’s too late. Here, we discuss some of the most common dos and don’ts of planning your estate – so you can get peace of mind that your wishes will be carried out quickly and efficiently after you pass.

 

DO: Identify your beneficiaries

Beneficiaries are individuals or entities who will receive your assets after your death. It’s crucial that you identify your beneficiaries early on and ensure your assets are distributed to them according to your wishes. If you don’t have beneficiaries in place, your assets may be distributed according to intestacy laws, which may not mirror what you want.

DO: Engage an estate planning specialist

Estate planning is a complex process, which is why it’s essential to seek advice from a qualified specialist. An estate planning lawyer can provide guidance on various legal matters related to estate planning, including wills, trusts and powers of attorney. It could also be beneficial to do this in conjunction with a financial adviser who can also help you minimise taxes and other expenses that may be associated with the transfer of your assets.

DO: Create a will

A will is a legal document that outlines how your assets will be distributed after your death. In short, everyone should have one. Having a will ensures your assets are distributed according to your wishes, and it simplifies the distribution process for your beneficiaries who may be dealing with their own grief. It also means you can appoint an executor who will manage your estate after your death.

DO: Consider a testamentary trust

testamentary trust is a trust that is established through a will and comes into effect after your death. It allows you to appoint a trustee to manage your assets on behalf of your beneficiaries. Testamentary trusts can provide several benefits, including tax minimisation, asset protection and flexibility around how your assets are distributed.

DO: Communicate your wishes to your intended beneficiaries

In addition to formalising the documents in your estate plans, you should also keep the lines of communication open with your intended beneficiaries. This will help avoid confusion and potential conflicts after your death. By discussing your plans and intentions with them, you can ensure everyone is on the same page and understands your wishes.

DON’T: Procrastinate

Procrastination is one of the biggest mistakes people make when it comes to estate planning. It’s easy to put it off because you think it’s too complicated or because you are young and healthy or because you simply don’t want to consider your own mortality. But delaying the estate-planning process can have serious consequences – not just on you, but on those you love most. If you don’t have an estate plan in place when you pass, your assets may be distributed in ways you don’t want them to.

DON’T: Make assumptions 

Many people assume their assets will automatically pass on to their spouse or children after their death. However, this isn’t always the case. In some situations, the distribution of assets may be subject to legal challenges or disputes. That’s why having a will and other estate-planning documents in place can ensure your assets are distributed according to your wishes.

DON’T: Forget about tax

Without proper planning, your beneficiaries may be subject to significant tax liabilities. It’s important to consider the tax implications of your estate plan and seek advice from a qualified professional to minimise your beneficiaries’ liabilities. Gifting assets while you are still alive or setting up a testamentary trust, for example, can be tax-efficient ways to carry out your wishes.

DON’T: Set and forget

Estate planning isn’t a one-time event. It requires regular reviews and adjustments according to what’s happening in your life. For example, you might receive a large inheritance from a relative, get married or divorced, or have children or grandchildren. These changes can impact your estate plan, which is why it’s so important to review and update your wishes to ensure it accurately reflects your current wishes and circumstances.

 

You will always want what’s best for your loved ones, even after death. So why not start planning today? Seek advice and keep your plans up to date and ensure your legacy is protected.

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