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Have you reviewed your will recently?

Money Tips

Keeping your will current: the importance of estate planning

Estate planning is a vital aspect of your financial plan – but it is often overlooked or not fully understood.

A will is the foundation of your estate plan, and it ensures that your assets reach your chosen beneficiaries in an efficient and tax-effective manner after you pass away.

Without a will, the state laws and courts will decide how to distribute your assets, which can lead to unwanted results, delays, and high costs.

To make sure your will is effective, you should consider several key factors, including selecting executors, naming beneficiaries, providing for dependents, bequeathing monetary values, and assigning assets to be held in trust for minors.

Review your will regularly to ensure it’s current

It’s a good idea to review your will regularly to keep it current – your circumstances may have changed, and amendments required.

It’s also recommended that you speak to your financial adviser before engaging a solicitor to help you draft your will, as your estate assets will typically include real property, cash, bank accounts, shares, personal assets, and interests held as tenants in common.

However, superannuation assets and jointly held assets are usually excluded from your estate as they automatically transfer ownership upon the death of the other party.

This requires separate documentation and requests to regulate payment, which is directed by the fund trustees.

The role of a testamentary trust

Testamentary trusts are a type of trust that is established through a will and become active after the willmaker passes away.

They are often used to provide financial support and security to beneficiaries, such as minors or individuals with disabilities. The income and capital gains of a testamentary trust are distributed at the discretion of the trustee or executor, which provides flexibility and personalised distribution for the beneficiaries.

A testamentary trust can offer several benefits, such as reducing tax liability by spreading income and capital gains among multiple beneficiaries and providing protection from creditors, divorce proceedings, and mismanagement of funds.

It’s important to appoint a trustworthy and capable individual as the trustee or executor, and to consider the terms and conditions of the trust, including the distribution of income and capital gains.

Regularly reviewing the trust ensures that it remains relevant to your estate plan.

Consult with your financial adviser to find the right balance for your estate plan. The team at Crystal Wealth Partners can help you understand the benefits of testamentary trusts and how they can fit into your overall financial plan.

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