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Estate planning made simple, Part II

This is a second edited extract from Noel's new book, 'Wills, death & taxes made simple'. Last week, we featured an extract on making an effective will. Today looks at a hypothetical example where you have 18 months to live.

For the purposes of this exercise let's assume that you have been told you have a terminal illness and may well die within the next 18 months. These are the things that need to be considered.

Plan for your funeral

Discussing the funeral might be a good starting point. It allows open dialogue between family members and gives you the freedom to think about how you would like your funeral to be.

I recommend the book Never Forgotten by Michelle Lagana. It's only available on Kindle as far as I know, but goes into great depth as to things you might like to think about. It contains a huge amount of information and even includes suggestions for who the pallbearers might be and ideas for preparation of the funeral booklet.

At this stage, think about whether there are any funeral arrangements already in place. These could include a funeral bond or a pre-payment. If they are in place, it is important they be recorded and the documents readily available. The whole family should know of their existence; the last thing they need is to walk out of the service and discover the funeral had already been paid for with a different undertaker.

Share precious personal items

Often people have a range of belongings that really aren't appropriate to mention in the will, but which have considerable sentimental value. These may include photo albums, DVDs, family heirlooms, jewellery, kitchenware such as plates and glasses, or even items like workshop equipment or clothing.

The months before dying could be a time for reminiscing with family and friends, and a great opportunity as you give them some of these items, though remember this may trigger a CGT event, see pages 170—172.

Share important contacts

Most households require a team of people to make it function. These could include your plumber, electrician, gardener, bank staff, solicitor and various healthcare professionals. List the roles and contact details for all these people so things can carry on after your death.

Get your documents in order

It's absolutely vital that the necessary documents are up-to-date and readily available. We discussed this in depth in Chapter 4, and let me remind you about the appendix, Keeping the right records. It includes a link to the Executors' and attorneys' cheat sheet, which is available to download, complete, save, share as appropriate, and update at any time.

Is there a will, an enduring power of attorney (EPA) and an advance care directive? Are these documents up-to-date and readily available to the family? True, the EPA ends on your death but if you lose capacity — or just the desire — to deal with practical matters as time passes, the EPA could be essential for a range of financial and medical matters. You can probably figure out where you are likely to need the EPA. If you're not sure, I suggest you take it to at least your bank, accountant, and financial adviser, and have them vet it long before it's needed. I have heard numerous instances of people turning up with an EPA at the last minute, only for the institution to find some reason to reject it, or say they need a week to approve it.

Take a close look at your will. Have there been any major changes to your assets since you made the will? What about the beneficiaries: look for any changes in their situation since the will was executed. These could include having more children, changing tax brackets or ending a long-term relationship. In any such cases, the will should be urgently reviewed in light of their changed circumstances.

Talk to your executor/s

It is your executor/s who will manage your estate after you pass. It would be great if you could meet with them sooner rather than later to discuss your affairs in depth and give them an idea of how you would like things managed after you die. This will not just help them do their job, but also give you some comfort, knowing how your estate will be managed.

Sort out your super

If you have superannuation, you should share the recent statements and explain it all to your family. If your super includes life insurance, that will need to be noted, and your will may need to be amended if a large sum is expected to be paid to the estate. Are trustee nominations to be used? Are any binding death benefit nominations up to date? Are they lapsing or non-lapsing? All of this information is easily obtainable on the superannuation fund website or by calling your superannuation provider.

If you have an SMSF the most recent set of accounts should be available for the family to see, and you should introduce them to the people who administer the fund. This may be the family accountant or a specialist administration firm.

Remember the death tax of 15% plus Medicare levy, which is levied on taxable superannuation payments made to a non-dependant. You may want to withdraw as much of your super as you can before death and place that in your bank account, or, if you have enough liquidity, in a joint account your EPA and executor can access to cover your costs when your bank accounts are frozen.

Clarify the finances

In many couples, one person tends to manage the finances; when they die, problems can arise for the survivor. If you are approaching death, you will need to teach whoever will take over from you how your bank accounts work and give access to all email and contacts so things can be carried on or closed down when you have gone.

This is also a good time to introduce your stockbroker and financial adviser to the people taking over from you, and make sure they are right across your whole portfolio. Time spent discussing your investments, the reasons why they were made, and their potential is time well spent.

Check with your accountant if there are any changes you should make before you pass, such as selling assets with a capital gain to make use of any existing capital losses before they cease to exist on your death.

Delegate digital assets

Ensure that you have put in place the appropriate delegations for your online accounts to enable another person to access your accounts to operate, close, or delete them. Make sure someone is aware of all your online accounts, including social media, email, payment portals, and any other presence you have online. Although these accounts are usually not transferable (as they are not the property of the deceased), many enable the accountholder to appoint another person to deal with the account on their death.

Loyalty programs and points are often not transferable after death (they usually revert back to the provider); however, it is sometimes possible to transfer these points during your lifetime to another family member This could be particularly valuable if you have a credit card linked to an airline frequent flyer program with hundreds of thousands of points. A little forward thinking could provide a family member with enough points for an overseas trip after your death.

If you have cryptocurrency or are trading online, make sure the appropriate delegations or authorities have been put in place to enable these accounts to be closed.

Consider any issues arising from your current situation

If you are single, who will take care of a much-loved pet?

If you are partnered, does your partner have special needs, and if so, how will they be cared for when you are gone? A common situation with older people is that one person becomes the other's carer, and the situation can get very difficult if it's the carer who dies.

If you have children, will they be able to do the things that normally fall to family? If not, or if you have no children to call on, who will take on responsibilities like going through all your belongings and advising people of your passing?

Do you hold a life interest in a property? If so, what details do you need to give your executor to enable them to hand the property back to the original estate?

Is your current name different from a previous name? If so, what does your executor need to know about your earlier name/s, and what paperwork will they need to demonstrate that they can act for you under that name?


Noel Whittaker is the author of 'Retirement Made Simple' and numerous other books on personal finance. See This is an extract from Noel's book, Wills, death & taxes made simple, and is for general information only.



Seven steps to easier management of your estate

Estate planning made simple, Part I

Watch out, it's not easy being the executor of an estate


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