What is the difference?
Most people believe a legal Will adequately covers this and while it’s essential, a Will is only part of the process. Estate planning covers every facet of the distribution of your estate following your death.
A Will is a legally binding document that details your wishes regarding the distribution of your assets upon your death. It guarantees that your assets are divided up according to your wishes and an up-to-date Will is essential. Current studies show up to 45% of Australians do not have a current Will, meaning assets will be distributed according to the rules of intestacy. These rules may not reflect your wishes and cause undue hardship, delay and cost to your family.
Estate planning is the process of anticipating and arranging for the distribution of your estate in advance of your passing. The process attempts to eliminate uncertainties and maximise the value of the estate by reducing taxes and associated expenses. The ultimate goal of an estate plan is determined by your specific goals. Estate planning involves your Will, trusts, superannuation, beneficiary designations, life insurance, power of attorney and property ownership. The key point of difference between the two documents is that a Will is only one aspect of the estate planning process. As previously discussed, a Will comprises detailed instructions regarding your possessions and how they are to be distributed. By contrast, an estate plan is an all-inclusive set of documentation explaining how every facet of your life is to be dealt with following your passing, including your business if you own one. Your accountant can play a vital role in the estate planning process. There is a myth that estate planning is only for the rich and older people. This is untrue. Your estate plan comprises all you own, including your house, car, life insurance policy, bank accounts, superannuation, investments and more. It is never too early to consider the future planning of your estate. In addition to guaranteeing your possessions are left to your loved ones, careful estate planning includes:
- Naming a guardian and trustee for children under 18,
- Providing for the transfer of your business and personal dealings;
- Ensuring appropriate life insurance is in place to allow a business partner to purchase your share in the business at death and vice versa;
- Ensuring superannuation and life insurance monies are distributed in the most tax effective way.
If you do not have a detailed estate plan in place which includes a will, your wishes in regards to the distribution of estate cannot be followed. Make sure this does not happen to your family by trusting MCG Legal to handle your estate planning needs.