It's time to get serious about estate planning this silly season

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The Christmas carols have started, the social calendar is rapidly filling up and before you know it, you will be thinking about your new year's resolutions. There is no way to avoid it, the holiday season is upon us.

For many, the holidays are spent with family and loved ones and are a chance to reflect and take stock of changes which have occurred since the last festive season.

Perhaps your financial situation has changed, or you have had a health scare over the past year. You may have welcomed a new member to the family - either by birth or marriage - and are enjoying your first summer holidays together.

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Whatever the case, it is important to ensure that you and your loved ones are looked after, regardless of what the upcoming year may hold.

The Christmas and new year period is a good opportunity to have these discussions with your family and loved ones, to ensure those around you are aware of your wishes should anything happen to you.

Here are four questions you can ask to help better understand your estate planning needs:

  1. Does my existing will reflect my current situation and is it still legally valid?

You may be skimming through this article, satisfied that you already have an existing will. However many wills are revoked (no longer legally valid) or require updating following changes to your personal and financial circumstances.

For example, most wills prepared prior to marriage will be revoked once you are declared married, unless they are made in contemplation of marriage. Divorce on the other hand, does not revoke your will but it does remove your ex-husband/wife as a beneficiary of the estate.

If you have had a change in your relationship status, make sure to review and amend your will to ensure it is valid and reflective of your wishes.

Another common personal and financial change many go through is the sale or loss of assets. This can be anything from selling the family home to losing a family heirloom. If you have left a specific asset to someone in your will and you no longer own it, then this gift will fail.

  1. Who will inherit my assets? What effect could this have on them?

It is easy to view the transfer of your assets to chosen beneficiaries as a positive thing, however for some, a sudden windfall can cause personal or financial hardship so it is important to have considered the impact your bequest could have on your beneficiaries and ensure your will has been constructed to best suit their circumstances.

For instance, if your beneficiary is an undischarged bankrupt then you may find your hard earned money being put towards paying off debts that aren't yours, even though your wishes were for the estate to stay within the family.

Where a sizeable sum of money is being passed on, some beneficiaries may find it difficult to effectively manage such a sum, particularly if they have little financial experience or in extreme cases, are afflicted by addiction issues.

One way this can be avoided is by setting up a testamentary discretionary trust (TDT). This is a trust structure which provides greater asset protection should a beneficiary find themselves in financial strife.

If you wish to nominate somebody with special needs as a beneficiary, you should take into account his or her specific and complex needs. To assist these vulnerable beneficiaries you can consider the benefit of a Protective Trust or a Special Disability Trust.

  1. Do I know who my superannuation will go to?

Without a valid binding death benefit nomination in place, the trustee of your super fund has the power to determine who will receive your super on your death.

It is worth bearing in mind that parents, siblings and grandchildren do not automatically qualify to receive these funds.

This emphasises the importance of reviewing your superannuation as a part of your estate planning, and ensuring that you clearly set out your wishes regarding how your superannuation is to be distributed on your death.

  1. Who will make medical, lifestyle or financial decisions for me when I can no longer make them myself?

There is a misconception that estate planning only concerns what happens to you after you pass away. Accidents, illness and mental incapacity can happen at any age - and it is important that you and your family have clearly identified who will make important decisions on your behalf when you are unable to.

You can do this by establishing Enduring Powers of Attorney (EPA). Different Attorneys can be appointed for financial, personal and medical decisions, allowing you to choose the person best suited to each role.

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