How to get your financial affairs in order – The Australian Financial Review

If you start passing on mementos and assets to relatives, family and friends now, you can be sure they have gone to the right people, who also get the opportunity to express their gratitude.

You could also look to equalise benefits provided to beneficiaries, rather

than leaving it to equalisation clauses in your Will.

The same can be said for bequests to charities, known as “living giving”. If you make donations now, you can receive the tax deduction while you are still alive. These deductions may be especially useful if you are simplifying and selling assets, and capital gains are realised.

If you don’t have a Will, make it a priority. Depending on how complex your financial affairs are and how many different assets you own, you may need some professional assistance to find the best tax effective structure for your affairs.

You also need to make sure that your assets will go to your preferred parties and in a tax-effective manner.

But your Will isn’t the only document that controls distribution of assets, with some assets – such as your superannuation and family trusts – potentially falling outside of your estate.

Therefore your superannuation will need death benefit nominations in place, and you should document who takes over as trustee of your family trust. Also remember that jointly owned assets pass automatically to the survivor, rather than being subject to a will.

While you still have capacity, it is important to think about who your executors will be and to consider appointing a Power of Attorney (PoA), who has authority to deal with financial matters, and an Enduring Guardian (EG), who deals with health and lifestyle matters if you lose the capacity to do so yourself.

Lean on the lawyers

Getting your affairs in order includes simple things like getting all your important financial records in the one place.

Along with your Will and holding statements of shares and proof of

other investments, you should include the title documents of any properties.

If you’re concerned about losing these, consider keeping them with your solicitor. Include the names and contact details of any financial professionals you use in your document file as well, as this will be helpful for any executors and dependants.

Speaking of partners, are all your bank accounts and credit cards in the name of one spouse or partner only? It could be difficult for a surviving partner to access funds if their name isn’t on the account, so consider having at least one joint account and/or a separate account in each partner’s name.

Also, make sure you have a safe storage mechanism for your important passwords as well.

Other tasks to think about early are downsizing to a smaller property. This may involve a difficult culling out of treasured possessions, which leads some people to put it off indefinitely. But it can also help with the simplification process of your financial affairs, as well as taking some of the burden off your family when you do pass.

Finally, nobody likes to talk about it, assuming it will never happen to them, but there is a good chance you will need care at some point. You should think about your preferences for in-home care or aged care, and how you will fund it, well before you need it.

You then need to discuss these choices with your friends and family so they know exactly what you want. Putting this off may mean leaving it too late to make your preferences known, so it’s better to get it done.