Estate Planning Considerations

Many people think estate planning doesn’t apply to them – the word “estate” has connotations of vast acres of land, sprawling mansions, and millions of dollars. But this couldn’t be further from the truth.

Despite being one of the most critical areas in the total management of your financial affairs, estate planning is often overlooked. So, what is estate planning? It’s the complete consideration of your assets and liabilities. Everyone can benefit from estate planning, regardless of the amount of money you have, your age, or your family status.

As a minimum, we should all have a valid will and a power of attorney, which are reviewed every three years or so, or on major life events such as marriage, divorce or the birth of children or grandchildren. Estate planning can be used not only to distribute your wealth, but also to create and protect it.

Sound Life financial planners have the ability and expertise to assist you with your Estate Planning needs and objectives. However, your Sound Life financial planner must liaise with a solicitor or trustee to draw up your will.

What is Estate Planning?

Estate planning is a logical extension to the financial planning process. Having put your financial plan into place to ensure your family’s future financial security, estate planning can be a tax efficient means of transferring your assets.

At its core, estate planning aims to lessen the stress for grieving families during an already painful time. In essence, estate planning involves three basic elements:

  • deciding how an estate will be divided;
  • making or modifying your will; and
  • providing the means to ensure that your wishes can be carried out.

A well-constructed estate plan entails much more than making a will. It may, for example, include:

  • appointing a power of attorney - one person or a group of people you trust to look after your financial and business affairs;
  • establishing a discretionary or family trust to protect your wealth;
  • establishing a testamentary trusts to reduce your family’s tax liability after the main breadwinner’s death ; and
  • appointing a trustee and/or executor to carry out your wishes as per your will.

Power of Attorney

What Is It?
A power of attorney is a legal document in which you appoint someone to make financial, legal and/or medical decisions on your behalf. Depending on the extent of the power, the attorney (ie. the appointed person) is given authority to make decisions as if you were making them yourself. It is important to note that there are different types of power of attorney (eg general, enduring and irrevocable) which are more suited to different circumstances. It is also important to remember that there are slight variations in the law between states.

Why Take Out a Power of Attorney?
A power of attorney can be a very powerful tool in the organisation of your financial matters and personal affairs. A power of attorney is a legal document, which appoints one person to act on behalf of another, often in areas of property and financial management. A power of attorney is particularly useful if you travel or become physically or mentally incapacitated.

Case Study
Ben goes overseas to Kenya for a holiday. His daughter Sally is taking care of the bills while he is away. Ben didn’t appoint Sally as power of attorney, so she has no authority to deal with his finances or sign legal documents on his behalf. Had Ben provided Sally with a General Power of Attorney, she would have been able to conduct Ben’s affairs in his absence. While Ben is overseas, he is critically injured in a car accident and loses mental capacity. There is no one authorised to act on Ben’s behalf. This means that no one is able to pay expenses (such as medical expenses) for Ben from his existing funds without a court order. Had Ben returned safely, he could simply have revoked the Medical Enduring Power of Attorney and the General Power of Attorney in writing if he didn’t want Sally to continue managing his affairs.

How Do You Organize a Power of Attorney?
A power of attorney should be prepared by your solicitor. Standard forms are available from newsagents, but they should at least be checked on completion to ensure there is no error that would make them invalid. Your financial planner can help you identify your power of attorney needs.

Providing for Adult Dependents
If you are a parent with a child who has special needs, you already know the emotional, physical and financial costs that are associated. You would also be aware that these difficulties increase with the age of your child and that, as elderly parents, you may still find yourself taking care of your child well after you have retired.

Looking after adult children at home means you usually provide all the day to day care and comfort yourself, as well as providing nursing, feeding, cleaning etc. And this care may need to continue even after you die. While relatives may be willing to take over the care, the financial implications may be prohibitive.

In these circumstances, it is essential that you have an estate plan in place. Assuming you have the necessary funding, a good estate plan, will ensure that there is sufficient cash available for your child to enter into good quality care, or sufficient funds to assist a relative who is providing the care. You may also like to consider if you want the money paid directly to the proposed carer, or into a trust for the benefit of your child.


Sound Life & Superannuation Agencies Pty Ltd trading as Sound Life Financial Services are
Corporate Authorised Representatives of Synchronised Business Services Pty Ltd
ABN: 33 007 207 650 trading as SYNCHRON
Principal address: Level 1, 65 Palmerston Crescent, South Melbourne Vic 3051
Australian Financial Services License Number: 243 313