What is the difference between a will and estate planning?
A will is a legally binding document in which you will be able to specify the method to be applied in the management and distribution of your estate after death. You can also appoint guardians to look after your relatives if in case they need assistance due to old age or infirmity.
An updated will generally ensures that:
- assets will be distributed according to how you like them to; and
- your family will not face financial hardships after your death.
With an estate plan, you can appoint a guardian or trustee:
- to ensure that appropriate protections are in place for the beneficiaries;
- to ensure a smooth transfer of business assets;
- to purchase your shares; and
- to guarantee that the superannuation is distributed among the beneficiaries according to your wishes.
You can also give instructions regarding additional matters that are not and cannot be handled by a will—even if they are already mentioned. An estate plan typically includes but are not limited to the following:
- power of attorney;
- beneficiary designations;
- property transfer; and
- transfer of financial assets.
What is estate planning?
Estate planning is the general process of arranging the distribution of assets in a way that is fully beneficial to your beneficiaries. It generally ensures that your loved ones are left with the maximum possible proceeds from your estate upon death.
There are also other benefits to estate planning and consideration of later life finance such as:
- arranging a watertight will;
- understanding and outlining your wishes;
- making funeral plans; and
- obtaining a clear and comprehensive view of your assets.
The impact inheritance tax may have on their relatives is a very real and growing concern especially for people who are approaching their later life. Estate planning will be able to help you avoid or reduce the amount of inheritance tax you are likely to pay.
Your estate planning solicitor should be able to help you in drafting a plan that ensures taxes and associated expenses are minimized.
What do wills and estate planning involve?
Wills and estate planning can be roughly broken down into four key parts. These include:
- Writing a will and making executors, family members, and friends aware of it.
- Making a comprehensive list of your assets and your debts. This should include property assets, material assets, and any savings or funds you will leave behind.
- Planning and/or recording cash gifts you plan to give to protect against inheritance tax.
- Making provisions for funeral expenses and outlining your wishes so that family and friends can make arrangements accordingly.