Planning for the inevitable
Dying is not something we like to think about but a bit of pre-planning can save a lot of heartache for those we leave behind. Here are three important areas to consider with examples and possible solutions.
Allocation of your super
In most super funds, the trustee decides who gets your super including any life cover. The super rules require the fund to pay your dependants as defined in the legislation.
Example
A divorcee may want to leave money to his/her children from a first marriage but not to the ex-spouse. They cannot be sure that the trustees will not apportion part of their super to their former partner.
Possible solution
Some super funds allow you to make a Binding Death Benefit Nomination that will direct the super fund trustees in how your super is to be paid out. This ensures your super is paid out as per your wishes not at the discretion of an unknown trustee.
Perils of dying intestate
Without a “last will and testament” your assets are distributed according to a formula in state legislation. This may mean your assets are not distributed in the way you had wanted.
Example
A 27 year old was killed in a car accident. She had life insurance in her super fund and $95,000 was paid to her estate. She had no will and no dependants. Her estate was distributed according to the formula – half to her natural mother and half to her natural father. This was not what she would have wanted because her parents divorced when she was very young and her father had not played any role in her life since then.
Possible solution
Ensure you have a will and be very specific with your wishes.
Providing money for your dependants quickly
Upon death, your latest will should be found and accepted by the courts in a process called probate. People who may benefit from your estate can challenge your will and it may take some time before assets are distributed.
Example
The main family breadwinner dies. The family know that a will has recently been done however they are unable to find the will and other documents needed for both the funeral and to produce for the courts. This is a common situation that causes great distress. As well, an estranged child challenges the contents of the will and delays distribution of assets. In the short term, the surviving spouse may have insufficient money to live on, as well as a high level of stress at a time when they are least able to cope with it.
Possible solution
Firstly ensure you have all the necessary records in a safe place. Always tell the executor of your estate where to find this information in the event of death. To ensure family members are protected, a life policy can nominate a beneficiary. On proof of death the life office will pay the policy proceeds directly to the beneficiary without the need to pay money into the estate.