Retirement Income

Wed, 20 Feb, 2019Joanita Wibowo

4 steps to get your financial affairs in order

4 steps to get your financial affairs in order

It’s a difficult topic to discuss but getting your financial affairs in order could help your family get through a difficult time and ensure your wealth is distributed as desired. Here are a few things you could to prepare ahead.

1. List all assets

Put together a list of what you own (assets such as property, deeds, bank accounts, superannuation, investments, insurance policies and more), as well as what you owe (liabilities such as mortgages and loans). This will give you and your will executor a better idea on ways to administer your estate.

You could also start making arrangements with your banks and insurance providers that would allow your partner and/or family to access your funds after you die.

2. Write or update your will

A will is a legal document that sets out what will happen to your estate (assets) after your death. Besides distributing your wealth, a will also allows you to donate to charities, name an executor and transfer trust control.

You can create your own will by buying kits from a newsagency, a post office or online, but in general it is recommended that you enlist a lawyer or solicitor to make sure your document is signed and witnessed properly. Public Trustees can also help prepare your will for free if you appoint them as the will’s executor.

Your will might also need to be updated when there are significant changes in your circumstances. Events that necessitate revisions might include relationship changes (marriage, separation or divorce), death of executor or beneficiaries, the entrance of new family members, and assets purchase or sale.

3. Appoint people you trust

Tapping a trusted person or party to manage your affairs can help the transition process go smoothly. One of the most important roles to consider is the will’s executor, who will be responsible for collecting and distributing your assets as well as repaying your debts. This role often requires special skillsets and involves making difficult decisions, so you may want to consider nominating a professional third party such as a private or public trustee instead of a friend or family member.

It is also important to plan for who would make decisions on your behalf if something unexpected occurred and you could not look after your own personal and financial affairs. General power of attorney could make financial and legal decisions for you for a limited time – for example, if you are overseas. On the other hand, enduring power of attorney could make decisions on your behalf if you no longer have the capacity to do so on your own – for example, if you are mentally incapacitated – until you cancel or change them.

4. Organise your paperwork

Gather all important documents so that the person(s) managing your affairs will be able to locate them easily. These may include, but are not limited to: birth, citizenship and marriage certificates; bank account details; tax returns; vehicle registrations; Medicare card; life and medical insurance policies; house deeds; sources of assets and debts (including superannuation and investments); any pre-made funeral arrangements, and more.

Create both physical and digital copies of these files for safekeeping.

When in doubt, talk to a professional to discuss any matter of concern.

How have you prepared to get your financial affairs in order? Let us know in the comments.

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