Managing your finances can be challenging enough when you’re alive, and preparing your financial affairs to ease the burden on your family when you pass away even more so.
That’s because as well as the emotional impact of considering your own mortality and thinking of those you’ll leave behind, the end-of-life planning process itself can be daunting.
But putting your affairs in order, or helping a loved one do so now rather than later can be hugely beneficial for your family down the track.
This guide – the third in our series about dealing with bereavement – focuses on the actions you can take today to give the people you leave behind peace of mind in the years to come.
Create a holistic estate plan
An estate plan includes your will and other key documents that detail how you would like your assets distributed after your death. It also includes documents which specify how you would like to be cared for medically and financially if you lose your ability to make decisions for yourself in the future.
Key documents in an estate plan may include a will, superannuation death nominees, a testamentary trust, powers of attorney and powers of guardianship, and advanced health or advanced care directives.
Put a valid will in place
While most people understand the importance of having a will, the government’s MoneySmart site estimates that nearly half of all Australians die without one.
Each state has different laws about how your assets are distributed if you don’t have a will. The recently changed Victorian inheritance laws, for example, now do more to protect surviving spouses, but laws in other states are lagging.
Having a will is important even if you believe you have few assets. Many people have some superannuation savings, which often come with life insurance. Any pay-out would potentially go to your estate on your death, so you may well have more wealth to distribute than you believe.
A solicitor or financial adviser can advise on making a will, but if you’d prefer a lower-cost option, contact the Public Trustee in your state or territory to learn about its will-making service.
Get your banking and finances in order
Between bank accounts, insurance policies, superannuation or pension details, Medicare and health insurance and all the other financial records you may have accumulated over the years, the paperwork can mount up.
It’s worth sifting through your papers and keeping all your current financial documents in one place, while archiving or safely destroying documents which are no longer needed.
More information about digitising key documents for easier storage is available here.
Some other steps you can take to get your finances in order include:
It’s important to note that policies differ from bank to bank, therefore if you are considering your end of life plans, include any financial institutions in the planning conversation.
If you have previously lived overseas, be sure to include foreign bank accounts you may still have open in your review.
Safeguard your future decision-making
It can be easy to take your capacity to make decisions for granted – that is, until it’s taken away, either by some sort of accident or an illness such as dementia.
For this reason, it’s important to consider putting an enduring power of attorney (EPOA) in place sooner rather than later. This is a legal document in which you appoint someone to make decisions for you when you no longer have capacity to do so.
It makes sense to consider putting these documents in place while you’re reviewing your will and other estate planning documents.
More detailed information is available here.
While you can allow your appointed EPOA to make healthcare decisions on your behalf, if you wish to separate the responsibilities, an advanced health directive (AHD), also called a living will, is a common way to do so.
An AHD, which comes into effect when you’re deemed to have lost capacity to make your own decisions, allows you to set out your wishes on care issues, including life support, artificial feeding, resuscitation and organ donation. You can dictate when you want life-sustaining measures withheld or withdrawn.
Talk about your funeral plans
Many people put an informal funeral plan in place while they still have the opportunity to discuss with family members the type of send-off they would like to have.
Pre-paid funerals are also a common way of way ensuring that you receive the type of funeral service you would like, while protecting your family from the stress of making difficult decisions at an emotional time, and removing the financial burden of paying for your funeral.
The Australian Funeral Directors Association provides detailed information about funerals and funeral planning.
Seek expert advice
If you have substantial assets, it’s best to seek the advice of experts to ensure your wishes are accurately reflected in the legal documents that form your estate plan.
A financial adviser or your bank can help you to prepare for your future no matter what stage you’re currently at, while a solicitor can help to draw up legal documents for you and an accountant can advise on the best plan of attack on choosing business successors or setting up complex trusts.
If you move interstate or overseas, keep in mind that different states and countries have different laws which may affect your estate planning documents – your financial adviser can assist with advice here too.
Regularly review your plans
It’s important to explain your estate plans to your family and the executor of your will as well as keep them abreast of any substantial changes you may make in the future.
It’s also worth reviewing your plans every five to seven years to ensure they’re up-to-date.
While the discussions around death can be difficult for everyone involved, planning and acting now can help your loved ones experience a healthy bereavement and save a whole lot of heartbreak when the time actually comes for them to enact your final wishes.
BT (part of the Westpac Group) offer an obligation free, complimentary consultation with a financial adviser which you can book online.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.