They are subjects many ignore to their cost. But leaving life with our affairs in order and ensuring we are cared for are important.
In the countdown to leaving this world, there are a number of tough decisions – one is how to distribute your assets.
The purpose of Estate Planning is to ensure everything is in place to make your final days easier and what you value most will be passed on smoothly to your chosen beneficiaries. Everyone should have a last Will and Testament detailing how their assets should be disposed of. But many don’t.
According to the Australian Securities and Investments Commission, around half of all Australians die without a will, meaning the State determines how their assets are divided. This means relatives they resent or are estranged from will inherit possessions not meant for them. Wills can cost between $30 for an online kit to a few hundred dollars. There are good resources online providing affordable and effective templates. But the best course of action is to consider estate planning as part of a package designed with a professional financial adviser.
Another sensible course of action is to consider using a Power of Attorney document giving another person the authority to make legally binding decisions on your behalf while you are alive but incapacitated. There are two types of power of attorney: general power of attorney – which is for defined periods such as if you are overseas – and enduring power of attorney, which is more practical for your later years. In most cases, power of attorney will be given to beneficiaries in your will, people who will care for you and those making decisions on your behalf. A realistic plan for the elderly should also include the possibility of full-time care.
Often, people stay in the family home because they believe in leaving “something behind” for their children. They deny themselves the care they need, resisting selling the house so their children can have an inheritance. Others are able to stay in their homes and access a range of home and community care, some of it is subsidised by Federal and State Governments. Aged care need not necessarily be expensive. The amount you pay depends on your financial situation, which is assessed by a Federal Government agency.
After this assessment, you’ll be advised how much you have to pay towards accommodation costs. You can pay for this in a lump-sum bond or as a regular rental contribution.
Most people believe they need to sell the family home to be able to pay for any care, but that is not necessarily the case. It is possible to rent out the family home and use the money to subsidise care. Doing this doesn’t always have a negative impact on your assessable tax.
These are difficult and complex decisions best negotiated with the right professional advice. Good advice can save you and your loved ones time and money, making things as trouble-free as possible for all concerned.