Deceased Estate Made Easy: 3 Ways a Financial Planning Expert Can Help

By Ross Marshall.   Posted: December 2020

Deceased Estate Made Easy - 3 Ways a Financial Planning Expert Can Help

Deceased estate planning can be a challenging subject for many people. Common questions include, what does estate planning really entail and who do I consult to make the most out of it? In this article we cover these plus other frequently asked questions to help you effectively navigate estate planning.

In this article:

  • What is a deceased estate?
  • What happens to my deceased estate when I pass away?
  • If I have a will, what happens to my estate then?
  • Who do I consult when I want to make a will for my deceased estate?
  • How can a financial planning expert help me with deceased estate?

Deceased Estate Planning: What It Is and How a Financial Advisor Can Help

What is a deceased estate?

To answer this question, let’s first define what personal assets are.

Personal assets are things you own that have present and future value. Here are things you probably have right now that can be considered a personal asset:

  • Cash (in your pocket or bank)
  • Cash equivalents (stocks, bonds, and insurance)
  • Property and real estate under your name
  • Personal belongings (collectibles, furniture, and jewellery)

These things are called your personals assets throughout your life. But when you pass away, your personal assets become part of what’s called your deceased estate.

Deceased estate is the term used to describe the assets and liabilities you leave behind when you pass away.

Assets aren’t the only thing that’ll be counted as part of your deceased estate. Your liabilities— debts, mortgages, and loans—become part of your estate, too. Debtors usually take a cut from your assets to pay for your remaining liabilities.

FAQ: Can you use a deceased estate to pay for a funeral? Yes, in fact it’s very common. Banks will usually release payments from the estate to cover funeral costs and other outstanding rates and fees.

What happens to my deceased estate when I pass away?

Your estate will likely end up with your immediate living family members.

In fact, some laws predetermine who among your family gets to inherit your deceased estate and how much of it they actually take. Do note that these laws vary based on the different jurisdictions in Australia.

For example, if you were survived by a spouse and children, they’d be first in line to inherit your estate. When you pass away without a partner, your estate will likely end up with your parents, siblings, and so on. This is what will probably happen to your estate when you pass away without leaving a will behind.

A will is a legal document that details how you want your assets (and liabilities) to be distributed and who they’ll be given to—known as your beneficiaries—once you die.

While having a will can make distributing your deceased estate that much easier, many Australians today still don’t have one. In fact, as many as 52% of Australians aren’t bothered to prepare one because the idea of their own mortality is the last thing they think about.

As morbid as talking about death may be, it’s crucial to understand that your loved ones are better off when you have a will. Passing away without getting your affairs in order might put your spouse, children, and family in a situation where they have to spend more time, money, and energy sorting out your deceased estate instead of benefiting from it. This is especially true for when you leave unpaid loans and mortgages when you pass away.

If I have a will, what happens to my estate then?

When you pass away the legal representative you named in your will is in charge of managing your estate and distributing it as you’ve instructed. This legal representative is called your executor or administrator. It’s your executor who ensures that your final wishes are carried out.

Your estate administrator will work on these tasks:

  • Arranging your funeral (together with your family)
  • Applying for a death certificate and other legal documents
  • Paying for outstanding debts you left behind
  • Contacting the beneficiaries listed in your will
  • Distributing assets as you’ve instructed in your will

These responsibilities make choosing an executor to manage your deceased assets a crucial decision.

Who do I consult when I want to make a will for my deceased estate?

To ensure that your will covers all your assets, it’s best to consult an estate-planning attorney.

An estate planning attorney, also known as an estate lawyer, is an expert at ensuring your will gets written and implemented the way you want it to be when you pass away. Apart from helping you write your will, they can also help you include safeguards that protect your estate for your own and your beneficiaries’ benefit.

How can a financial planning expert help me with my deceased estate?

Apart from consulting an estate attorney, it’s also a good idea to talk to a financial planning expert when penning your will.

Financial advisors and planning experts aren’t just professionals at helping you achieve your financial goals, whether they’re short- or long-term. Here are three ways they can help you make deceased estate planning easier:

1. They can give advice on how to maximise your deceased estate.

Consolidating your finances

First of all, if you know that your time is ending, a financial planning expert may advise you to consolidate your finances, accounts and investments – essentially, gathering up whatever disparate accounts you have into a centralised location. This ensures that nothing is overlooked after your passing and significantly decreases the admin burden for your loved ones who would need to perform this reconciliation after your death anyway.

Distributing your estate

A financial advisor can also assist in ensuring that your estate is adequately distributed among your beneficiaries without a fuss. This can be challenging, especially with complex family structures, children who are estranged or have disabilities, or when someone in the family suffers from addiction. Your financial advisor has experience in assessing these situations and recommending the most appropriate solution – including formal mechanisms such as a testamentary trust, special disability trust, and binding & non-binding beneficiary nominations, all of which provide greater control over the distribution of assets after death.

Sidenote: It’s important to note that while your financial advisor is a powerful ally in planning your estate, all decisions are taken in conjunction with your solicitor who is the one executing your instructions.

Avoiding unnecessary taxes

Finally, and very importantly, you should be made aware that depending on how you choose to distribute your assets can have tax implications (and therefore have financial impact on the beneficiary). For example, different rules exist for determining who is a dependent when it comes to the taxation of super death benefit; and if you choose to pay the money out in a lump sum or as part of an income stream. There are simple strategies a financial planner can help you put in place to ensure your money goes to the intended recipient/s – and not the taxation office.

2. They can help you list down all your assets.

You can probably make a list of your assets all on your own. It’s as simple as going around your house and writing down everything that’s more or less valuable to you. Your home and car are examples of assets. More common examples include your jewellery, furniture, and antiques.

But did you know that your life insurance and pension benefits can be considered an asset, too? Professional financial advisors can help you determine those lesser-known assets that can go into your will later on.

3. They can assist you in identifying your debts.

Just as financial advisors are trained to determine your assets, they’re also pretty good at identifying your liabilities, which is something many people forget about during estate planning.

It’s important to remember that your liabilities are also part of your deceased estate. This means any debts you leave unpaid when you die become your loved one’s responsibility. Staying on top of your debts early on ensures that you don’t pass on the burden of paying to your family.

As a financial advisor helps you make a detailed inventory of your assets and liabilities, you’ll be able to get a better picture of what your deceased estate will look like. In doing so, you ensure your spouse, children, and loved ones’ wellbeing even after you’re gone.

Key Takeaways

The bottom line: estate planning is not something you should be leaving to the last minute. The inevitability of death is something we are not all willing to face, but if you can muster the courage and objectively review your situation 5-10 years in advance then you are providing your loved ones with the best outcome possible after your death. This gives you the chance to consolidate your finances, review and eliminate your debts, organise life insurance (if you don’t already have it), write your will, and set up proper, optimised structures around your superannuation and other assets to avoid unnecessary dramas or taxes during disbursement.

With Raeburn Advisors at your side, we can help make your deceased estate planning journey simple and rewarding. Our panel of experienced financial planners are a well of practical advice that help safeguard your hard-earned assets for your family and loved ones later on.

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This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

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