So, what is estate planning? Estate planning is basically what it means: to plan one’s estate.
Regardless of a person’s status, they should always opt to plan their estate and write a Will. In this legal document, they will write how to distribute their estate after they pass. Now, can you imagine if a person did not plan how to distribute their estate before they passed? Yes, you can only imagine the number of disputes and legal battles between beneficiaries that can happen.
So, yes, it’s important to learn the estate planning process. No asset is too big or small when you want to start writing your Will. Remember, every asset counts!
Wait, so What Are Considered Part of an Estate?
Yes, certain things are considered part of an estate, and certain conditions enable them to be one. Let’s look at each one.
1. Real Estate/ Property Ownership
Do you have a property/home under your name? A personal property is an estate asset. However, if you own it with another person, it’s not considered an estate asset. Instead, upon the Will-maker’s death, their share automatically transfers to the surviving joint owner.
A Will-maker will also hold a specific share if they own a property as tenants-in-common. This can be owned either solely by the Will-maker or as joint tenants within the co-ownership. If a person solely owns their share, that portion is an estate asset and can be distributed through their Will.
2. Superannuation/ Death Benefits
In this article about ‘What is estate planning?’, it’s important to discuss superannuation as an estate asset. When does this become one? You will need to complete a Binding Death Benefit Nomination (BDBN) and name a Legal Personal Representative (LPR) as a beneficiary.
The LPR will then administer the superannuation funds under your Will. Make sure to renew your BDBN every three years so it remains legally binding.
Read: The Duties of Superannuation Lawyers | JB Solicitors
3. Bank Accounts
Do you still have savings in your bank accounts? Any remaining balance in your account is considered an estate asset. If you own a bank account with another person (jointly owned bank accounts), the balance there is not an asset. Instead, upon a Will-maker’s passing, any funds in their joint accounts will automatically transfer to the surviving owner.
4. Shares
We also need to consider shares when we want to know what is estate planning. Any shares you solely own are an estate asset. You can transfer these shares directly to a beneficiary in your Will. You can also sell them, and the proceeds will become part of your estate.
Now, what if you jointly own these shares with someone? Similarly, these will transfer again to the surviving owner. The surviving joint holder will also inherit the original cost basis for those shares, which is important for future tax considerations.
5. Motor Vehicles, Personal Items, Household Goods, and Pets
Yes, you read that right! Even pets are considered an asset, just like the aforementioned ones. You can specify in your Will who can receive these items and/or who will take care of your pet.
6. Digital Assets
Don’t leave out any potential assets you have online! In this age and generation, a lot of things online are considered an asset. Do you do livestreams on online platforms like Facebook, Twitch, Instagram, or TikTok? What about any songs or podcasts you have on music-streaming platforms? Anything you earn from these platforms is a valuable asset.
However, these platforms have their terms of service that restrict account access from people other than the account owner.
Let’s not leave out cryptocurrencies as well. Today, a lot of people still hold valuable digital assets in Bitcoin, Ethereum, Chainlink, Solana, and more. Will-makers should ensure that their executors have access to their crypto accounts to secure them.
What Is Estate Planning: Getting Started
Now that we know what an asset is and its conditions, let us list down what you can do to effectively start an estate plan.
- Jointly-owned assets can cause a lot of confusion and dispute! Make sure to talk to any person you jointly own assets with that you will take your shares beforehand. As mentioned, any jointly-owned assets will automatically go to the surviving owner.
- Make an inventory of all your assets, including your liabilities. Regularly review your estate plan in case of particular changes in your life, such as divorce or newly bought or assets sold. This w, ay you will know the entire value of your estate.
- Nominate each beneficiary in your Will with accuracy. List down their full details and how much they will receive from your funds, and what kinds of assets they can receive.
- Either a public trustee or a lawyer can act as an executor on your behalf
- Make sure to appoint guardians for minor children who are dependent on you in your Will
- Will-makers should also prepare for any future tax implications after their death. Doing so can minimise their potential capital gains taxes and income tax on inheritances that the Australian Taxation Office will collect.
- Appoint a trusted person as your enduring power of attorney or guardian should you become incapacitated. This person will be responsible for distributing assets and making financial and legal decisions if you cannot do so. Such a person should have good financial knowledge so they can handle your assets properly.
Want to know more? Click here to read our article about the powers of attorney to learn how this works.
What Is Estate Planning: Contests and Challenges
This is a very common occurrence when a Will-maker dies. One or more people will find an opportunity to contest or challenge a Will because they think that the Will is invalid. Consequently, they might make claims about:
- Unfair provisions
- Who should be included in the Will
- The Will’s invalidity because of the Will-maker’s incapability to write or understand what a Will is. Sometimes, some Will-makers are forced to write a Will under coercion or duress.
- The Will-maker having no Will at all
A lot of people tend to dismiss this part of estate planning. In the end, this causes a lot of tension between intended beneficiaries and/or family members. What we can advise you to do if this happens is to provide adequate, but not equal, provisions for anyone who will potentially challenge your Will.
It is true that Will contests and challenges are inevitable, but what you can do is minimise the damage they can do.
I Want To Create the Perfect Estate Plan
Anyone wants to create a perfect Will and provide adequately for their beneficiaries. Moreover, a Will-maker does not want disputes between their loved ones and family members after their death. So, who can help with creating the perfect Will? While there are no golden rules about a perfect Will, we at JB Solicitors can make an estate plan that caters to your interests.
Our Wills and estate planning lawyers will tirelessly work with you to create a hassle-free estate plan. Estate taxes? We’ll handle the computation. Other legal documents you don’t know of? Our lawyers will know which ones you’ll need. We can identify any potential pitfalls and act as your executor to handle your financial affairs and legal decisions for you.
Contact us today if you have other questions other than ‘What is estate planning?’
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