The Estate Planning Checklist: What to Have in Place, and Why

Estate planning is not only for the wealthy, it is the process of making sure your assets go where you want them to, your family is provided for, and someone you trust can act for you if you are ever unable to make decisions yourself. This checklist sets out what a complete estate plan covers for a South Australian resident, including the tax and superannuation elements that a will alone does not deal with.

The checklist at a glance

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  A current will
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  An Enduring Power of Attorney (financial and legal matters)
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  An Advance Care Directive (health, lifestyle and personal matters)
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  A decision on whether a testamentary trust suits your estate
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  A binding death benefit nomination with your superannuation fund
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  A complete, accessible record of assets, debts and account details
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  A regular review schedule

1. Take stock of what you actually have

Before anything else is drafted, list what you own and owe: property, bank accounts, superannuation, shares, business interests, and significant personal property, alongside any debts. Include digital assets, email, social media, subscriptions and anything with an online login that someone will need to access or close. This list is what your will, your executor and your accountant all work from, so it needs to be complete and current, not reconstructed after the fact.

2. Make a will

A will sets out who receives your assets, names an executor to carry out your wishes, and can nominate a guardian for any children under 18. It needs to be prepared properly to be valid, an incorrectly witnessed or ambiguously worded will is a common cause of estate disputes. This is a job for a solicitor, our role is making sure the tax and structuring decisions behind the will, like whether to use a testamentary trust, are sound before it is drafted.

3. Set up an Enduring Power of Attorney

An Enduring Power of Attorney (EPA) lets you appoint someone to manage your financial and legal affairs, paying bills, managing accounts, dealing with property, if you are ever unable to do so yourself. In South Australia, EPAs are governed by the Powers of Attorney and Agency Act 1984 (SA), and unlike an ordinary power of attorney, an EPA remains valid even after you lose legal capacity, which is the entire point of having one.

Power of attorney rules differ by state and territory in Australia, so if you own property or have family outside South Australia, that is worth raising with your solicitor specifically.

4. Set up an Advance Care Directive

An Enduring Power of Attorney only covers financial matters. Health, medical treatment, and lifestyle and accommodation decisions are covered separately in South Australia by an Advance Care Directive, which lets you record your wishes and appoint someone to make those decisions on your behalf if you cannot. Since 1 July 2014, the Advance Care Directive has replaced the older Enduring Power of Guardianship form for this purpose.

5. Decide whether a testamentary trust suits your estate

A testamentary trust is a trust created by your will that comes into effect on your death, rather than while you are alive. It offers two things an ordinary will alone does not: some protection of inherited assets from a beneficiary's creditors or a family law dispute, and a real tax advantage for minor beneficiaries. Income a testamentary trust earns from assets that came from the deceased estate is “excepted trust income,” taxed to a minor at ordinary adult marginal rates, including access to the tax-free threshold, rather than the much higher rates that normally apply to a minor's unearned income. This is genuinely useful where grandchildren or young children are beneficiaries.

Whether a testamentary trust is worth the additional cost and complexity depends on the size of the estate and who the beneficiaries are, this is a conversation to have with your accountant before the will is drafted, not after.

6. Check your superannuation death benefit nomination

Superannuation is not automatically covered by your will. Your super fund's trustee decides who receives your death benefit unless you have a valid nomination in place, which is a common and costly surprise for families. A binding death benefit nomination directs your fund on exactly who should receive your benefit and generally lapses three years from when you sign it unless your fund offers a non-lapsing option, so it needs to be checked, not set once and forgotten. See moneysmart's guide to who gets your super if you die for the different nomination types, and our SMSF administration team if your super sits in a self-managed fund.

7. Keep your records together and accessible

Keep insurance policies, bank and account details, your will, EPA, Advance Care Directive and asset list together, or at least know exactly where each one is. Tell your executor and attorney where to find them. A well-drafted estate plan that nobody can locate when it is needed achieves nothing.

8. Review it regularly

Review your estate plan every three to five years, and immediately after a major life event, marriage, divorce, a new child, buying property, or a significant change in a business you own. Superannuation nominations in particular need checking on their own schedule since a lapsed nomination reverts to the fund's default position, not your will.

Get the tax and super side of your estate plan right

The Kalculators works alongside your solicitor on the financial side of estate planning, testamentary trust structuring, superannuation death benefit nominations, and deceased estate tax returns when the time comes. Book a consultation or call (08) 7480 2593.