Throughout the Six Fundamentals of a Strong Financial Plan series, we've discussed some of the fears that you may face in making a decision regarding your financial plan and how the barrage of attention-grabbing headlines and world events distract you.
We've highlighted the importance of focusing on these six key pillars of personal finance to hold you in good stead despite the noise in the media.
To recap we've discussed the importance of the following:
- Managing your cash flow
- Protecting your greatest asset.. you
- Paying down inefficient debt
- Engaging with your super
- Structure your wealth
In the final part of the series, we'll introduce you to the pillar which underpins a strong financial plan.
This is the importance of consciously planning your Estate to ensure you and your family are looked after in any event.
#6 - Plan Your Living and Deceased Estates
A fundamental pillar of a well-structured financial plan is your Estate, both living and deceased.
An up to date Will that specifies how you want your Estate distributed, who their beneficiaries are and any structures you require to administer these benefits, such as Bare or Testamentary Trusts, is vital. Not to forget, you will need to nominate multiple Executors to execute the Will when required.
The little twist that often brings people undone with a Will is nominating Guardians for children. It is difficult but very important for every parent to consider.
Although not part of your Deceased Estate, an important aspect of estate planning includes your death benefit nominations on your superannuation and pension funds and your life insurance. This is to ensure that timely distribution of these benefits can occur to your chosen beneficiaries which can be vital where benefits are needed to pay down debt or to fund an ongoing lifestyle for your family.
Your Living Estate is also something often overlooked. Ensuring you have a Power of Attorney (Enduring) is vital to guarantee that should you lose the ability to make financial decisions for yourself, someone - your appointed attorney - will act on your behalf in your best interests.
Additionally, a Power of Guardianship (Medical Power of Attorney) is also important. If you are unable to make medical decisions for yourself, then it’s comforting to know that you have elected someone, Medical Power of Attorney, to make important medical decisions for you that are in your best interests.
It’s important to note that these planning tools are just as important for married couples as they are for singles.
The key aspects of the Estate Planning Pillar include:
- Having a current and up to date Will, with appropriate structures in place;
- Make sure Executors nominated know that they are Executors and are aware of the location of the Will;
- Having in place appropriate nominations for Enduring Powers of Attorney;
- Having in place an appropriate Medical Power of Attorney (or power of guardianship);
- Having guardians nominated for underaged children in your Will;
- Having valid death benefit nominations on any superannuation and pension; and
- Having the appropriate level of cover and beneficiary nominations on your life insurance policies.
In the process of living our everyday lives, finding the time to address these pillars can become extremely difficult.
However, the consequences of not having these key pillars in place can have a significant impact on your financial lifestyle and quality of life now and in the future.
If you have been considering the review of one or all of the above pillars and need some assistance then we encourage you to contact the specialist team at RSM.