Terribly sorry, we have bad news
WE don’t want to put a dampener on your Sunday, but have you thought about what would if you died right now?
It’s not a happy thought but you’re not God. It’s going to happen sometime and there will inevitably be consequences for your loved ones. Those consequences can range from sadness, but happy memories, through to a financial nightmare.
The last thing anyone wants is for their death to lead to financial hardship or bickering among loved ones because their affairs weren’t in order.
So here are some quick tasks to complete to make sure those loved ones are protected … then get back to happier thoughts. And remember bad things happen to good (and young) people every day as well.
Once you have a family to support and financial obligations, taking out appropriate insurance cover is a no brainer.
Think about this: If you die, who’s going to make the mortgage payments? If your spouse was forced to sell the house, where would they live? Who would pay to feed the kids and cover their education?
It’s also worth considering what would happen if an accident or injury rendered you incapacitated, unable to work and required expensive round the clock care.
Life insurance, total and permanent disability cover and income protection are good options to protect your family in these scenarios.
The level of cover required will depend on your personal situation, so make an honest assessment and get covered.
Make a will
A will sets out exactly what you want done with your assets when you die. Not having one means you don’t get a choice and the courts will ultimately decide how your estate is divided.
A will is a legal document and needs to be in writing, signed by the testator (you) and witnessed by two people who are not beneficiaries of your estate. You also have to name an executor of the estate to administer the will.
Executors are required to do things like pay outstanding debts, submit a final tax return and distribute assets. You can appoint a family member or a professional like a solicitor or accountant, but it’s often advisable to appoint more than one person.
It’s important to regularly review the will and update it after any major changes in your life, like getting married or divorced, buying a property or having a baby.
Make sure your family knows exactly where it is kept. Give a copy to your solicitor and file one at home.
If your affairs are complex then it’s worth getting advice from an accountant or financial planner on estate planning and using a lawyer to formalise the documentation.
Discuss the options and the tax implications of each alternative for the beneficiaries.
If you’re looking to protect your estate, a practical option can be to set up a testamentary trust through a will instead of leaving assets directly to beneficiaries.
A testamentary trust can protect assets from claims against beneficiaries, and also be highly tax effective compared with direct transfer of ownership.
These alternatives are costly to set up, but worth considering if you have substantial assets.
Talk to the family
While it’s hard to talk about death, it’s important to let your family know what’s provided if you die unexpectedly and to make your final wishes known.
Telling loved ones how your estate will be divided, and why, can save a lot of additional heartache and even a protracted legal battle after you’ve gone.
For example, you don’t want children assuming they’ll be inheriting a fortune when in fact you plan to give it all to charity.
And it’s worth discussing funeral arrangements and funding and talking directly to your appointed executor about any funeral plans.
Finally, look into entrusting a loved one with a Power of Attorney so they can manage your assets and financial affairs if you’re unable to do so.
These can be uncomfortable conversations to have, but when the time comes those close to you will be thankful.
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