4 Ways Estate Planning Can Help You Protect Your Wealth

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One of the most important decisions you can ever make about your wealth is also one of the least discussed. Even the hardest headed business people are sometimes reluctant to talk about estate planning since it inevitably brings the subject of death very close to home. Some think of it as something they only need to worry about at the very end of their life and would – understandably – greatly prefer to postpone the matter until then. This may explain why 52% of Australians don’t even have a will. 

However, more long-sighted thinkers recognise that estate planning should begin as soon as you have significant assets, as it can help you manage and protect your wealth as your living situation changes and progresses. They understand that early and proactive estate planning is essential because it can protect your assets and make sure your family, loved ones and business interests are looked after should you pass away or be incapacitated. Estate planning will ensure your tax obligations are met while keeping them as low as legally and ethically possible so that your wealth and assets can be passed on without unnecessary losses. Here are four ways estate planning can protect your wealth.

1. Estate planning maximises your existing assets

Being proactive about your estate can realise huge benefits for you and your beneficiaries by ensuring you are maximizing all of your assets. A good lawyer with expertise in estate planning can work with you to assess your situation, looking at your business interests, property, assets and funds in detail. The more complex they are, the more important this advice is. A good estate planning lawyer will identify the potential tax deductions that could occur in the event of your death or incapacitation and work out how to protect your wealth from those losses that are unnecessary. There are many steps which can be taken to achieve this, from the restructuring of your business interests, the creation of trusts, and – of course – the writing of legally watertight wills.

2. Estate planning protects your family from unexpected bills

Although a formal “death tax” was abolished in Australia in 1979, many believe that there is a chance of it being reintroduced in the future as public finances are placed under ever greater strain. Even if no such death duties return, there are still tax obligations on earnings, investments and assets that will apply in the case of your death, but these can be kept lower if they are managed properly by an expert in estate planning. You don’t want the value of your estate as you know it to change, you want to ensure that what you want to hand over to your beneficiaries is exactly what they get. Good estate planning can provide you with that elusive peace of mind. As the debate over how to pay for aged care costs continues to simmer in the public sphere, you need expert advisers who understand the evolving legal situation and will ensure that in your case the bills for any future care costs can be covered while protecting as much of your wealth as possible. 

3. Estate planning reduces exposure to financial risks

Wisely taking the necessary steps towards an orderly transfer of your estate mitigates the risk that your wishes will not be listened to in the event of your death or that your legacy may look very different from the one you have had in mind through all your years of hard work. Without legally watertight paperwork, there is always the risk that your wealth could be vulnerable to outside lawsuits or that it could end up being eaten up in a dispute among potential beneficiaries. The tragic case of Millie Phillips, once known as Australia’s richest woman, shows just how damaging the consequences of not having a robust will in place can be. Good estate planning can leave your wealth much less vulnerable to such harmful disputes and risks.

4. Estate planning protects your assets during times of great change

COVID-19 has reminded us all of just how vulnerable we all are to change. As well as the enormous social disruptions it has caused, it has also had a huge financial impact from the country’s GDP right through to individuals’ shares and investments. There has reportedly been renewed interest in writing wills and other forms of estate planning during the pandemic, but this isn’t just about increased fear of mortality. There is also the awareness that if you should die during a time of economic turmoil, that could impact the amount of money that is passed on. Good estate planning will ensure your assets and wealth are managed flexibly during times of great change. Having good estate planning in place also means that you can get on with the more enjoyable task of growing your wealth while living your life fully, knowing that your money will be well protected not just today or even tomorrow but long into the future, bringing joy and comfort into the lives of those you care about for generations to come.

Who is Lazarus Legal?

A trusted Will & Estate Planning lawyer is one of the most important components of the process. At Lazarus Legal, we work with a large range of clients who wish to create, update and plan estate plans that fits their lives, priorities and future aspirations, regardless of the size and complexity.

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We’d be lying if we told you that this bloke isn’t the big honcho of our team, but his name is a dead give-away. The founder of Lazarus Legal, Barry Lazarus is an old school, tough as nails lawyer. They don’t forge litigators like this anymore. With decades of experience in both Australia and South Africa, his wisdom is as renowned as his name.

Everything You Need to Know About Estate Planning

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Most people think estate planning is just about deciding where your money will go after you pass. There is a lot more to it than just that. We see it as a continuous process of defining and protecting your interest and that of those around you, to ensure clarity and peace of mind for everyone involved in the process.

The reason it is a continuous process is that there are always life events and experiences that change family structure, work and financial position, and health conditions. These factors directly impact you and those around you whether directly or indirectly.

A competent estate lawyer will help you plan, implement and modify the right estate plan that’s comprehensive, detailed and protects your assets and the interest of future generations and those you care about the most.

More specifically, an estate plan dives into and covers a wide range of legal areas including:

  • Business Succession Planning
  • Asset Protection (including tax minimisation)
  • Trusts and financial assets
  • Wills
  • Elder Law
  • Probate
  • Insolvency
  • Family Law
  • Superannuation Funds

Key Elements Of Estate Planning

A.   Establish a Trust

One of the most common components which a lot of people may already be familiar with is the ‘Trust’.  A trust is essentially a legal entity that can own and hold assets during and post one’s life. It provides a great level of control over the possession and transfer of assets according to one’s wishes which are typically outlined in the document that was used to create the Trust.

A trust can be used to determine how a family member or others can benefit from an asset at some point later in life in a certain way.

Trusts have many uses whether for commercial or financial reasons or also as care and support mechanisms for the elderly and aging individuals. Having a trust is proven way to safeguard your assets from being misused or used in a way that you do not wish and maintains a high degree of control.

In saying that, it is not a must to have a Trust. Is it recommended? In many cases, the answer is yes. Having a Trust in place helps oversee and manage one’s assets appropriately and effectively.

B.   Healthcare Power of Attorney

A healthcare power of attorney (HPOA) is probably the less known part of estate planning. It’s a signed legal document through which you can assign someone to be your healthcare decision-maker in the event you are not able to make these decisions yourself.

C.   Living Will

Similar to an HPOA, a living will, also known as an advanced medical directive, defines how those around you including medical professionals should go about your medical care if you are unable to communicate, debilitated or terminally ill. A living will is a declaration or a statement outlining your wishes relating to decisions about life support including things like a life-sustaining medical intervention that you may or may not want. 

D.   Financial Power of Attorney

A financial power of attorney is another important document that details to others and the state who and how you want to make your financial decisions on your behalf should you become unable to make them yourself. In the absence of a Financial Power of Attorney, no one has the authority to manage your finances including bills payments, investment decisions, sale or purchase of assets, or other financial matters.

E.    Last Will and Testament

Commonly known as a ‘Will’, most estate plans include what’s referred to as ‘last will and testament’ which details what you or the person wishing to distribute their assets along after they pass away.

In the absence of a will, most states will resort to a process referred to as ‘probate’ which outlines how the assets will be distributed based on the laws in the state the individual who is passing, resides. However, the presence of a will overrules the probate and allows people to specify how their wealth and assets should be distributed.

A good rule of thumb when planning to do a will is to discuss with close and trusted family members and friends on how you plan to pass your assets to minimise or avoid conflicts after you pass.

Creating and amending your will becomes imperative and necessary whenever there is a significant life event or changes such as a marriage or a newborn child. It’s highly advised that life changes should be followed by updating all the relevant estate plan documents.

The more complex your life becomes whether it’s due to the number and variety of assets you have, the number of people receiving the assets, the more important it becomes to plan and update the will and estate planning documents via an estate attorney.

The steps of estate planning

Estate planning is beneficial and recommended for many people more than one would assume. Why? An estate plan is an effective way to ensure your home, other assets and finances are managed and distributed appropriately following death, allowing individuals to pass their wealth over to the following generations in the ways they wish.

Discussing your estate plan with an estate planning lawyer is critical especially when you know or experience life-changing events. Any time your circumstances change significantly such having a newborn, getting married, getting divorced, etc., updating your estate plan is quite crucial because it will ensure your assets will remain in the hands of those you wish to pass them to. Another benefit for estate planning is ensuring that the guardians of your children are those whom you want them to be.

So, how do you go about the process of estate planning? There are 6 main steps to follow.

1.   Create a list of what you own and what you owe

The first step is about putting together a comprehensive list of all your assets and debts. This should include account numbers, real estate properties, investments, etc. as well as key contacts’ information like business partners, associates, colleagues, and advisors. This document (digital or on paper) should be kept secure and confidential – along with original copies of any important document.

2.   Create a clear plan

An estate plan along with the various estate planning documents explained in this post, allow you to have a high degree of control over your assets currently and in the future, during and after your lifetime. To create a good estate plan, you need to think, examine and assume multiple scenarios and detail how you want your affairs to be run should these events materialise.

3.   Think about children and dependents

The main goal for people and by default, estate plans, is to protect the best interest of loved ones. This entails not only their current interests but their future needs as well. Your estate plan should cover any provisions for your children (including those from previous marriages) including guardianship and providing for those from a previous marriage.

4.   Protect your assets

A crucial element of a successful estate planning is being able to protect your assets. If your assets are not properly protected, they can be compromised before you can share them with others. Utilising trusts, life insurance and other methods to minimise taxes, and guide the transfer of your assets can help maximise the value and protection of your assets.

5.   Document your wishes

Once you have figured out the who, what, when and how of your asset’s inheritance and transfer, it’s time to legally document these procedures. A good estate planning lawyer will ensure you cover all scenarios, accounts, assets, insurance policies, businesses, etc., and confirm that your plan is maximising your potential and is in perfect alignment with your goals and objectives.

6.   Appoint fiduciaries

To successfully implement and execute your estate plan, you need to elect someone to act on your behalf in the event you are not able to. That individual is the ‘executor’ of your will, trustee for your assets, the legal guardian for your dependents. They are also personal representative or power of attorney in the event you became incapacitated.

To assign someone to become your fiduciaries, they need to be aware of and agree to that appointment. They also need to be aware of the estate planning documents and have access to them. Contrary to what some people think, fiduciaries don’t necessarily have to be family members, they can also be personal friends or even hired professionals like attorneys.

Advantages of estate planning

Estate planning is about thinking of others and protecting their interest. If done correctly, it can be life-changing or even ‘generational changing’. Here are some of the main benefits of executing and maintaining an effective estate plan.

  1. Provide and look after those you care about. An estate plan will ensure that the right people you want to be taken care of and receive your wealth or assets are going to legitimately receive that help.
  2. Minimise or eliminate your family or beneficiaries from going into conflict and dispute giving everyone a high level of peace of mind.
  3. If your children are under 18, estate planning will ensure the right, appointment person will look after them and be their guardian.
  4. Restate planning can in many cases help reduce taxes that take place on your estate. By executing an estate plan, you should be eligible to reduce the estate tax amount that’s required which will result in your beneficiaries keeping more of the money you leave for them.
  5. Support family members or relatives who may need help the most. For example, you may have a child with a disability or grandchildren who will need money for their future studies or wedding. Your estate plan can set specific trust and finds for them.
  6. Be prepared for any unfortunate event that can affect you personally. Should you become incapacitated in some shape or form, having an estate plan will ensure that your wishes and desires as to what medical or life decisions are taken on your behalf are carried out.
  7. Support a cause close to your heart. If you are passionate about helping others and giving to charity, an estate plan can enable you to support your favourite charities after your passing.
  8. Leave this planet on your terms and make it easier for your family. An estate plan can outline how your funeral can and should be carried and you can even set aside funds for the costs of the arrangements needed.

Frequently Asked Questions

What does estate planning involve?

Estate planning involves ascertaining how someone’s assets and wealth are held, managed, and passed to others after they pass. However, it goes beyond that to also dictate how some important decisions are made for people and elders when they become incapacitated. And finally, it allows you to protect your children and in many cases, minimise taxes.

How much does an estate planning lawyer cost?

The short answer is it quite depends on the level of experience and competence needed to create your estate plan. You might be able to get away with an entry level attorney, but you might also find out that you really need an attorney with 10 or more years of experience. A reputable estate planning lawyer will be able to give you an accurate estimate. At Lazarus Legal, we often provide a fixed fee for many of our clients and we may be able to do that for you also.

How much would a lawyer charge for a living trust?

In Australia, the cost for an estate lawyer to create a trust will greatly depend on the complexity of the trust and the level of details that go into it. For example, the more assets that are managed under a trust, the more likely there are more time and cost involved to create it.

What is the difference between Will and Estate Planning?

Most people assume that a will and estate planning are the same things. Whilst they a few things in common, they are not the same. A Will is focused on how your assets will be managed and distributed after you pass. An estate plan, however, goes into the details of your affair and children’s affairs whilst you are alive and covers areas including health and life decisions.

When should you do estate planning?

The earlier the better. An estate plan doesn’t necessarily have to be executed towards final years of one’s life. In many times, an estate plan can bring many benefits during one’s life just as much as post his/her life.

Who is Lazarus Legal?

A trusted Will & Estate Planning lawyer is one of the most important components of the process. At Lazarus Legal, we work with a large range of clients who wish to create, update and plan estate plans that fits their lives, priorities and future aspirations, regardless of the size and complexity.

Did you enjoy reading this article, share it with others.
Share on facebook
Share on twitter
Share on linkedin
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Share on email

We’d be lying if we told you that this bloke isn’t the big honcho of our team, but his name is a dead give-away. The founder of Lazarus Legal, Barry Lazarus is an old school, tough as nails lawyer. They don’t forge litigators like this anymore. With decades of experience in both Australia and South Africa, his wisdom is as renowned as his name.

Lazarus Real – Interview with Beyond Billables

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