Knowing the essentials about estate planning
Contrary to what you might think, sound financial planning doesn't stop at your time on this earth. If you're planning to pleasantly live out your days in the Whitsunday Shire, whether Bowen, Proserpine or Collinsville, you've got to make sure your finances and wealth are properly taken care of should the worst happen.
This is where estate planning comes in.
What is estate planning?
An estate plan is a legal framework that sets out what will happen to your wealth and assets in the case of death or permanent incapacity so you control what happens. It involves legal documents like wills, powers of attorney, testamentary trusts and powers of guardianship, which guide how your assets are distributed as well as what will happen to you if you can't take care of yourself.
Why is estate planning important?
Taking care of your wealth and assets can be tricky enough while you're still alive and in good health, let alone if you're permanently disabled or have passed on. Without an estate plan, the event of your passing could be chaotic, with family unsure of how to divide your assets and distribute them. Estate planning helps to prevent this from happening.
It's also for the benefit of your loved ones. You want to make sure your dependants are looked after by who you most want to take care of them. A good estate plan will also limit the amount of tax your heirs have to pay when your property passes on to them.
What happens if I don't have an estate plan?
Without an estate plan, the way your assets and wealth are distributed will likely fail to match your wishes. For instance, let's say you die without a will, also known as dying intestate.
Each state and territory has its own rules for what happens to a deceased's estate if they don't have a valid will. In Queensland, the estate passes on to your next of kin or, failing that, to your parents, siblings or more distant relatives. It's important to note that this may not match your preferences – what if you had a recent falling out with your spouse, for example?
For this reason and more, be sure to put estate planning at the top of your priorities when sitting down with a financial advisor.