Estate planning and wills: How to protect your assets

Ensuring that your wealth and possessions are distributed according to your wishes is a critical part of effectively managing your finances. This is also often referred to as "estate planning."

Estate planning involves managing and arranging your assets so they are protected and passed on to your beneficiaries efficiently.

Without a substantial estate plan, your loved ones may face unnecessary legal complexities and financial stress - an all too common situation in Australia.

In this guide, we'll walk you through the essentials of estate planning, how to make a will, the key components of an estate plan, how to protect assets in a will with an experienced financial advisor and share an estate planning checklist to help you get started.

What is estate planning? 

Estate planning refers to the process of arranging how your assets will be managed and distributed after your passing. Most commonly, it's a legal document that outlines your wishes and can ensure your family is taken care of in the way you intend.

While every estate plan will look different, some of the most common elements of an effective estate plan include:

• A will - A legal document outlining how your assets will be distributed and who will oversee the process. 
• An executor - This is the person you appoint to carry out your will and handle financial and legal matters. 
• Trusts (if applicable) - Legal structures that hold and manage assets for specific beneficiaries, often used for tax planning and asset protection. 
• Superannuation and beneficiary nominations - Your superannuation does not automatically form part of your estate, so you need to nominate beneficiaries. 
• Guardianship (if applicable) - This includes instructions on who will care for your children if they are under 18. 

How to make a will - six steps to protect your assets  

One of the most important steps in estate planning is drafting a legally valid will. Although the way wills in Australia are produced can vary by state, the fundamental process remains the same.

Here's how you can create a will:

1. List your assets: Identify all significant assets, including property, savings, investments and personal belongings.

2. Choose beneficiaries: You will need to decide who will inherit your assets and how much they are entitled to. It's important to be as clear as possible to avoid discrepancies or even potential disputes later on.

3. Appoint an executor: Select a trustworthy individual or professional to manage your estate after your passing. For many Australians, this can be their child, solicitor, lifelong friend or partner.

4. Consider guardianship (if applicable): If you have children under 18 at the time you are writing your will, you must appoint a legal guardian outlining who will take care of the children and how you intend for them to be raised.

5. Seek legal assistance: While you are entitled to put together a will yourself, working with a solicitor or professional estate planner can ensure your will is legally sound and enforceable at the time of your passing.

6. Keep it updated: As you progress through life, major life events such as marriage, divorce or the birth of children may require you to update your will to ensure it still reflects your wishes.

How to protect assets in a will with the assistance of a financial advisor  

As we mentioned earlier, working with a lawyer or financial advisor is not mandatory when drafting a will. However, it can make all the difference in ensuring your will meets legal requirements, ensures your wishes are carried out without disruption and can help preserve wealth.

Some of the areas a financial advisor specialising in estate planning can assist with include:

• Help structure trusts and investments for tax efficiency. 
• Assist in superannuation and pension planning to maximise inheritance benefits. 
• Guide you through asset protection strategies for beneficiaries. 
• Collaborate with estate lawyers to ensure your estate is structured correctly. 
• Provide insights into minimising risks of estate disputes. 

Your estate planning checklist 

A comprehensive estate plan involves several key elements. To ensure no step gets overlooked, refer to the estate planning checklist below:

• Create or update your will that includes your assets and wishes 
• Designate an executor to manage your estate 
• Establish trusts (if necessary) to protect assets and beneficiaries 
• Nominate superannuation beneficiaries to control your retirement funds' distribution 
• Consider tax implications for asset inheritance 
• Plan for business succession (if applicable) 
• Discuss end-of-life care preferences with family members 
• Review powers of attorney and guardianship arrangements 
• Secure and store your estate planning documents safely 

Learn more about how you can secure your future with Money  

No one wants to think about a time when they are no longer here, but by taking the right steps now, such as drafting a legally sound will and protecting your assets, you can provide peace of mind for yourself and your family.

Want to learn more about estate planning? Visit the Money learning hub for expert insights and practical financial guidance.

Get stories like this in our newsletters.