Money musts before you die
Don't leave behind a financial mess
It might be hard to think about, but if something happened to
you, having your financial affairs in order will make a difficult
time a little easier on your family.
You need to ensure that your documents are stored in a secure
place that your loved ones can find. They need to know what assets
you have, what insurance policies are in place and how to access
your superannuation or life insurance.
Here are some simple steps you can take to protect the important
people in your life.
Check bank accounts and other
assets
Can your bank accounts be accessed by your partner when you die?
If you're unsure, check with your bank.
If accounts are in your name only, how would your family access
funds? Do you need to set up an emergency fund to cover things like
funeral expenses, that more than one person can access?
Review your assets and work out which ones will be passed
directly to beneficiaries and which ones will have to go through
your estate. For example, if you and your partner own a
property together as joint tenants, the property will automatically
transfer to your partner when you die. However, the same property
owned solely by you will become an estate asset and will need to be
dealt with in your will.
Review your life
insurance
If you have people in your life who rely on you for financial
support, such as a partner or dependent child, having life
insurance is one way to make sure their financial needs will be
taken care of if something were to happen to you.
Life
insurance (also known as death cover) will pay a lump sum to
your beneficiaries when you die. This money could be used to pay
off your mortgage or other personal debts or to provide an income
for your dependents.
You might also want to consider getting total and permanent
disability (TPD) cover, which will pay a lump sum if you become
totally and permanently disabled. If this happened, not only would
you lose your income, but you may have high care costs.
Life insurance through super
Most super funds will automatically provide you with basic death
and TPD cover so you may already have some cover within your
superannuation fund. See insurance through super for the
pros and cons.
Super and life insurance beneficiaries
Review the beneficiaries you have nominated with your super fund
or life insurance policy, especially if you have separated from
your partner or your children are now adults.
Make sure you understand the tax implications of your
beneficiary nominations. For example, a super benefit may pass to a
spouse tax-free but may be taxable in the hands of adult children.
For more information on how tax is calculated on super death benefits, see tax and
super.
Involve your partner in your
finances
If your partner is not involved with your finances, try to get
them involved. Introduce them to your accountant, financial
adviser, lawyer, or any other professional you use to help manage
your affairs.
If something unexpected were to happen to you, your partner
should at least have a basic idea of what assets and liabilities
you have and who helps you manage them.
Consider leaving detailed instructions on how to access joint
assets such as bank and investment accounts in a secure place. Do
not store passwords with log in details.
Write or update your will
Having a valid will ensures your assets go to the people you
want to have them. You might also consider granting someone you
trust an enduring power of attorney to manage your affairs should
you lose mental capacity.
It's a good idea to review your will and powers of
attorney on a regular basis or whenever your circumstances
change. Be aware of events that may invalidate your will, for
example, a new marriage will void your will but divorce will
not.
Guardianship of children
A will can also contain details of who will take legal
guardianship of dependent children if something happens to both of
you. This person is usually someone you trust to raise your
children in a similar way to the way you are raising them, and
someone who has the emotional and financial capacity to take on the
responsibility.
Setting up a trust
If you have a lot of assets or a complicated family structure
you may consider using a trust to hold your assets. A family trust
can be created while you are still living. A testamentary trust is
created by instructions in your will, in the event of your
death.
You should ask a legal professional to check your estate plan to
make sure it is valid.
Keeping your important
documents safe
To make sure the person managing your estate can easily locate
all of your financial information, set up a file listing all your
assets, liabilities, insurance policies and other financial
information.
The file should include all relevant details such as:
- the financial institution, account number, name of the
account
- policy provider, policy number, date the policy commenced and
is due to expire
- any other information that may be required to accurately
identify you or your account.
You should also include the latest account statement for these
documents in the file. Don't forget to include financial products
where you receive correspondence by email.
Consider keeping a hard copy and an electronic copy of this
file. Keep the electronic copy in a secure data file and the hard
copy in a locked filing cabinet that only the person managing your
estate has access to. Do not include passwords or other access
details that only you should know.
Here's a full list of all the important
documents you should put in a safe place.
Don't leave behind a financial mess when you
die. Develop a plan and get your paperwork in order to make sure
your loved ones have one less thing to worry about when you've
gone.
Related links
Last updated: 13 Feb 2019
