Why Estate Planning Is an Investment

If you're considering estate planning, you might be wondering whether the cost is worth it.

It's a fair question. There are plenty of cheaper options available, including DIY Will kits, online templates, and standard forms. So what are you actually paying for when you engage a lawyer to help you put an estate plan in place?

The answer goes well beyond the documents themselves.

A good estate plan is about understanding your circumstances, identifying potential problems, considering your options, and putting the right structures in place for your family.

The value is in getting the plan right.

Estate planning is about more than what happens when you die

When people hear "estate planning", they often think about a Will and what happens to their assets after they die.

Your Will is an important part of your estate plan, but your estate plan can do much more.

It can address what happens to your assets after your death, who will manage your estate, who you want to care for your children, and how your children or other loved ones will receive their inheritance.

It can also protect you during your lifetime.

An Enduring Power of Attorney allows you to choose who can make financial and personal decisions for you if you lose capacity. Without one, QCAT may need to appoint a guardian or administrator, depending on the circumstances.

An Advance Health Directive allows you to record your wishes about future health care and treatment.

Together with your Will, these documents form an important part of planning for both your lifetime and your death.

Your family circumstances matter

There is no single estate plan that works for everyone.

Your family might include young children, adult children, stepchildren, a blended family, a child with additional needs, or beneficiaries who may need additional protection when receiving an inheritance.

You might own your home with someone else, have investment properties, own a business, have assets held through a trust, or have significant superannuation and life insurance.

You might also have concerns about what could happen to an inheritance after it passes to your children.

These circumstances can affect the way your estate plan should be structured.

For example, a standard Will may be appropriate for some people. For others, a testamentary discretionary trust may provide useful flexibility or protection for beneficiaries.

The important question isn't whether one structure is universally better than another. It's whether the structure you've chosen is appropriate for your circumstances and the outcomes you're trying to achieve.

What are you actually paying for?

When you engage a lawyer to help with your estate plan, you're paying for more than someone to prepare four documents.

You're paying for the process of working out what those documents need to do.

That includes considering things such as:

• Your family: Who depends on you, who you want to benefit, and whether anyone may need additional protection or support.

• Your assets: What you own, how you own it, and whether each asset will pass through your estate or another mechanism.

• Your superannuation and insurance: Superannuation doesn't automatically form part of your estate, so your nominations and the way your super fits into your broader estate plan need to be considered.

• Your property ownership: The way property is owned can affect what happens to it when you die.

• Your decision-makers: Who you trust to manage your affairs if you lose capacity, administer your estate, and potentially manage trusts for your beneficiaries.

• Tax: Whether there are tax considerations that should influence how your assets or benefits are structured.

• Asset protection: Whether there are risks associated with assets passing directly to a beneficiary and whether another structure may be appropriate.

• Your wishes for your children: Who you would want to care for them and the guidance you want to leave for their upbringing and future.

• Your future: Whether the plan gives your family enough flexibility to deal with circumstances that may change after your death.

This is where the value of estate planning lies.

It's the thinking, advice, strategy, and coordination that sit behind the documents.

The risks of choosing the cheapest option

There is nothing inherently wrong with wanting to keep costs down.

The problem arises when the option you choose doesn't identify an issue that could have a significant impact on your family.

A DIY Will might successfully record who you want to receive your estate. It might also leave important questions unanswered.

For example:

• What happens to your superannuation?

• How are your children protected if they inherit at a young age?

• What happens if you have a blended family?

• Should an inheritance pass directly to a beneficiary or through a trust?

• What happens to your assets if you lose capacity?

• Who will make financial and personal decisions for you?

• Does the way you own your property affect your estate plan?

• Are there beneficiaries who may need additional protection?

• Are your Will, superannuation nominations, property ownership, and other arrangements working together?

A document can be legally valid and still fail to achieve the outcome you had in mind.

That's one of the biggest risks of treating estate planning as a document-purchasing exercise.

The cost of getting it wrong

The financial cost of estate planning is usually paid upfront.

The cost of getting an estate plan wrong can be paid by your family later.

That cost might involve additional legal work, disputes between family members, unnecessary complexity in administering the estate, tax consequences, assets passing somewhere you didn't expect, or an inheritance being exposed to risks you hadn't considered.

There can also be a significant emotional cost.

Your family will already be dealing with your death or, if you've lost capacity, the circumstances that led to it. Having uncertainty around your wishes or your affairs can make an already difficult situation harder.

A well-considered estate plan gives your family clear directions and reduces the number of decisions they need to make themselves.

Estate planning is an investment in your family

Estate planning is an investment because you're putting time, thought, and money into something that is designed to protect the people and assets that matter to you.

For many families, the cost of preparing an estate plan is small compared with the value of the assets being protected and the potential financial and emotional consequences of getting the plan wrong.

More importantly, you're making decisions while you can.

You're choosing who you trust to make decisions for you. You're deciding who should benefit from your estate. You're thinking about how your children will be cared for. You're considering how an inheritance should be managed. And you're giving your family guidance about what matters to you.

Those decisions are worth getting right.

A good estate plan should grow with you

Estate planning isn't something you do once and forget about.

Your circumstances can change. You might buy or sell property, have another child, separate or remarry, start a business, receive an inheritance, experience a significant change in your finances, or simply change your mind about who you want to appoint or benefit.

The law can also change.

Your estate plan should be reviewed when your circumstances change and periodically to make sure it continues to reflect your wishes and your family's needs.

The value of estate planning isn't simply in having a Will sitting in a drawer.

It's in having a plan that makes sense for you, works with the assets you own, and gives your family the best possible starting point when they need it.

That's an investment worth making.