Do I Really Need An Estate Plan?

Life does not always go to plan. While we logically know that, most of us don’t plan for the worst – it’s all a bit morbid and time consuming.

Life does not always go to plan. While we logically know that, most of us don’t plan for the worst – it’s all a bit morbid and time consuming. The down side of not planning is the potential for hard earned assets to be wasted, family fall-outs, and money handed to the Government or solicitors that could have been better managed. If you are a business owner, then the stakes are even higher.

We spend our days trying to “outrun the clock” but it always catches up with us.

As a population, planning is more important than ever because:

  • The ageing demographic – 1 in 7 of us are now aged 65 and over (3.8 million)
  • Over the last 25 years there has been an explosion of wealth in Australia
  • The baby boomer generation represent only 25% of the population but hold 55% of the wealth
  • We are entering a period of intergenerational wealth transfer from the baby boomer generation. Although it may be okay for our parents or grandparents to ignore estate planning, the stakes are much higher today.

Estate planning is simply identifying your assets and what you want to happen to those assets if something happened to you. As part of that, you need to look at the issues that might arise and how best to manage them. All of this is then reviewed for tax outcomes and the legal requirements to provide the best care and protection for your beneficiaries.

If you are a business owner, there are also another set of issues to consider to ensure that the business can continue, or your capital can be extracted, if you are not able to operate in your current role. Or, your beneficiaries can take their share of the wealth accumulated in the business. This planning will protect your beneficiaries, the business, and your business partners.

Estate planning does not have to be hard work but it does have to be planned. It should not be left to chance. 

It’s also important to understand that actual wealth or the size of your estate is not the sole reason for estate planning. Estate planning is important for:

  • The care and maintenance of minor children
  • Managing the respective rights and expectations of beneficiaries, particularly with blended families
  • Disputes between family members
  • Relationships outside of the immediate family
  • Liabilities of the estate
  • Assets which may not be capable of immediate realisation or where value will be diluted by realisation
  • The transfer of assets through generations
  • Management of your social media

Estate planning seeks to not only distribute the assets of your estate but do so in a way that protects the estate, addresses issues within the estate, and fulfils your wishes.

What the stats say…

While 4 in 5 of us rate our health as very good, 50% of Australians have a chronic condition that is likely to cause their death, 63% of adults are overweight or obese, and around 45% of us will experience a mental illness in our life time.

Leading causes of death differ by age:

  • 1–44 years: suicide, land transport accidents
  • 45–74 years: coronary heart disease, lung cancer
  • 75 years and over: coronary heart disease, dementia and Alzheimer’s disease

It’s estimated that 138,300 people were diagnosed with cancer and 48,600 died from it in 2018.

Australia enjoys one of the highest life expectancies of any country in the world at 82.5 years (in 2015) and is ranked fifth among 35 Organisation for Economic Co-operation and Development (OECD) countries. Japan came first with a life expectancy of 83.9 years.

Men aged 65 in 2014–2016 could expect to live another 19.6 years (an expected age at death of 84.6 years) and the life expectancy of women aged 65 in 2014–2016 was 22.3 years (an expected age at death of 87.3 years).

We’re also working longer – 13% of Australians aged 65 and over participate in the workforce (17% for men and 10 for women). This is compared to 2006 when the workforce participation rate was 8%.

Source: Australian Institute of Health and Welfare

If you believe it’s time to speak to an Estate Planning expert, contact Paris Financial today.

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Phillip Anthony Partners joins Paris Financial East Melbourne

We are pleased to share that the team at Phillip Anthony Partners have merged with Paris Financial. Our team at Paris Financial can provide you with a large range of quality financial services with over 65 people located across two convenient locations in Blackburn and East Melbourne.

Paris Financial shares the same philosophy as Phillip Anthony Partners of providing a value focused and high quality service for each of our clients. We look forward to assisting with your accounting needs.