Estate Planning For Different Life Stages
30th November 2017
Estate planning is not just the preserve of the elderly or the sick. Everyone, regardless of their age or health, should consider an estate plan that takes into account their assets and family situation.
While there isn’t one single answer or solution that will suit every individual, one thing that is true is that an estate plan is more than just a Will; it's a strategy that ensures not only that assets are directed to chosen beneficiaries but that someone else can make financial, medical and legal decisions on a person’s behalf if they lose the capacity to do so themselves. See Enduring Powers of Attorney.
Financial advisers and estate planning practitioners are key in helping ensure a person’s wishes can be carried out the way they require.
What estate planning meansDeveloping an estate plan involves ascertaining a client’s estate, determining their wishes and intentions and how they can be fulfilled, and advising about the implications of their intentions.
Estate planners do not simply ask what a client wants and prepare a Will without providing advice – the advice is the important part of the estate plan and without it, the documentation may not be as effective as otherwise.
There is also the importance of considering what the client’s wishes are during their lifetime as, with an aging population, it is becoming increasingly common for people to lose capacity and require another person to act as their attorney or be appointed as their administrator. Unless this is sorted out when they still have capacity, this may not be the person they would prefer and will be decided by the Family Court.
Different needs at different stages
People will have different requirements for an estate plan depending on what life stage they are at.
Young, single, no dependants
While people who are young and independent like to think they are invincible, they are of course as prone to illness or accidents as anyone else.
Furthermore, this category is increasingly likely to be accumulating wealth in their own right. Therefore, it is important for young singles to prepare a Will, enduring power of attorney and appointment of enduring guardian.
This will help ensure that during their lifetime, someone has the power to make financial, legal, medical and healthcare decisions on their behalf if they lose the capacity to do so, and that on their death, assets will pass in accordance with their wishes.
Single but committed
People who are in a serious committed relationship – whether defacto or not – should consider what will happen to their partner if they die or lose the mental capacity to handle your own affairs.
Will they lose their home? Will they inherit all possessions, or will other family members take everything away?
Likewise, what will happen if the partner dies or loses capacity?
Unromantic though it may seem, getting married is an important trigger for reviewing existing estate planning documents. For example, marriage can automatically revoke a Will so this will need checking.
Some points to consider include:
- Has the marriage revoked the current Will?
- Has the marriage revoked an existing enduring power of attorney or appointment of enduring guardian?
- What is the effect of any superannuation nominations? For instance, is a nomination of a previous partner still valid? If so, is this still desirable?
- How has life insurance been affected - are beneficiary nominations still appropriate?
Married with children
Having children is also an important life stage for reviewing an estate plan.
Does the Will provide for the appointment of guardians? It may need to be updated to nominate testamentary guardians to take care of the children if both parents die at the same time.
Does the current Will allow the children to inherit their share of the estate as soon as they reach 18 years of age? If so, is this appropriate? It might be worthwhile thinking about including testamentary trust provisions in a Will so that children do not inherit everything at a young age.
What if both parents become incapacitated at the same time? Who would look after the children then, and what financial arrangements are in place to look after their schooling, maintenance, and so on?
Divorce and property settlement
Unlike marriage, divorce does not automatically revoke a Will, so a review of estate planning is crucial at this stage.
Many couples go through a separation period before getting divorced. In the absence of proper estate planning, a now ex-partner may still inherit if a person dies after separation but before divorce is finalised.
Revise any enduring power of attorney documents – people usually don’t want their ex having a say in their finances and health and medical decisions! - If you don't already have an EPOA or Advance Care Plan we have templates available for LifeLot members to use.
Also revise any trust documents because an ex-spouse may be able to take control of the trust.
Remarriage and blended families
Blended families are increasingly a factor in today’s society, and can cause a number of complications.
Some crucial considerations include:
- Revise a Will and trust documents to reflect the proper beneficiaries
- Consider whether the new spouse will be provided for in the Will
- Consider whether any children of the new spouse from a previous relationship will be provided for
- Be aware of the Family Protection Claim a claim that is made under the Family Protection Act 1955 which in New Zealand extends to stepchildren - they may be able to claim against an estate
- Determine which assets will be left to the new spouse and which to leave your children, and if any will go to a previous spouse
- Consider a Binding Financial Agreement with the new spouse
The crucial documents
If you are unsure where or how to begin organising these documents, one of our Preferred Lawyers is the best place to start.
Regardless of the stage of life, the most crucial documents to include in an estate plan and in your LifeLot account are:
- Wills (and Memoranda of Wishes), instructions to Guardians of minor children
- Superannuation Death Benefit Nominations
- Powers of Attorney and Appointment of Guardians
- Trust Deed
- Superannuation Trust Deed
- Company Constitution
- Shareholders Agreements
- Binding Financial Agreements
Do you have your Will and Enduring Powers Of Attorney sorted?
We know you're busy and sometimes it's not easy to think about planning for your future and end of life care, but it is important. To keep it super quick and easy, LifeLot retrieves information that has already been entered into your LifeLot account. All LifeLot templates are easily editable, printable and free to download.
Why It’s Important To Organise And Share All This Stuff With Someone
Life is full of twists and turns. Planning and gathering together all these jigsaw pieces now will relieve a lot of stress later. Whether you’re recovering from surgery, involved in an accident, or embarking on the one adventure every human must eventually take into the great beyond. This info will come in handy for you in every day life, your family and loved ones. By organising and sharing the location of all these things you’re helping yourself to become more efficient, engaged in your life and your family can easily take over if needed.
It's simple to set up, free to try, and it can make a world of difference for your family if something happens to you.