Financial foundation tip #5: Estate planning

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In this segment Helen explains tips number 5 of her 5 top tips for creating a strong financial foundation.

Transcription

Interviewer: 96.5, where your family is number one and I’m super excited to be catching up with Helen Baker again, she’s from On Your Own Two Feet. She’s been giving us the financial foundations and you’ve got one final one, estate planning, Helen tell us a little about that this evening.

Helen: Yes, estate planning is probably a phrase actually most people wouldn’t know of, but if we asked somebody if they had their will, they’d know what we mean when we talk about that. But true estate planning is looking at everything.

So obviously the will is a problem for a start because a lot of people don’t have one, or they have one and it was done so long ago that it kinds of doesn’t match what they want things to be at the moment. And there’s quite a few tricky little bits in there where you can make a mistake. You think you’re doing a right thing, but it’s usually not set up properly. So there’s usually a few issues there to tweak in your will.

Another is to think about guardianship and that’s always a good one to get the couples having a little bit of an argument as to who they think should be as a guardian because it is a tough one. You can think they are going to your parents, but how old are they? And is that suitable. And then if it’s the sister or a brother or how is that going to work. And the thing to think about there from a financial perspective is, if you were going to ask someone to be the guardian of your children if something happened, heaven forbid, you know, will they have to make adjustments that you need to provide something for them financially, such as extensions on their house or enough finances, how will that get set up is really important and usually it’s linked to what’s called trust structures, which is another complicated kind of thing to talk through as well.

So wills, guardianship, and the other thing is to think about is where your superannuation is being left. So, a lot of people will do nominations to their mum. Cause everyone loves their mum usually.

Interviewer: Yep.

Helen: But most mums actually don’t qualify under what’s called the sis act, so it can only be your spouse or de facto partner, your children, or a financial dependent or inter-dependent. So there’s things where some people have nominations that probably aren’t right. And then there are things around what’s another level which is called testamentary trusts and all of that needs to be all working together.

So estate planning, just again is a little more complicated than just doing your will. And it’s something that we put off cause obviously we don’t want to talk about those sort of things. But ultimately there are two things that will happen in life and that’s death and taxes so they say.

Interviewer: Yes, that’s so true. And we do put it in the too hard basket, but when you break it out like that, you can actually see the benefits. I’m already writing things down, I’m going to go home and chat to the hubby about. We’ll be having a discussion shall we call it.

Helen: Oh, let’s have the lovely talk on that, you might need a glass of red to do that one, but yeah, the consequences are you need to look at the tax implications of leaving things in certain ways and all of that because if you think you are going to leave X, once all the tax issues are dealt with you might only be leaving Y and that might just not be enough.

So it’s really worth digging in and getting some advice to make sure things are going to turn out how you expect them to and hopefully it’s never such a problem.

Interviewer: And there’s one final thing we need to think about isn’t there, Helen, and that’s the power of attorney.

Helen: Yeah, so the last thing to do is to think about the power of attorney and there’s an enduring power of attorney and a normal power of attorney and they can be different in that one is used even if you leave mental capacity, so there’s that to it and then the financial and health part, we can use different people for different aspects of that power of attorney role, or they can be the same one, so it depends what you’d like.

Interviewer: Wow, thank you very much, Helen, it’s definitely food for thought as we would say. And if you would like to find out more, Helen is wonderful, she’s got a website, OnYourOwnTwoFeet.com.au, lovely to chat to you, Helen, we’ll catch up again soon.

Helen: Thanks very much, cheers, bye.