Estate planning

I’ve nearly had a lot of car accidents recently. The closest calls have always been just after crèche pick-up.

The crèche teachers, bless ’em, are awesome. Boundless love and encouragement wrapped in an overdose of community spirit. And that’s to the stressed parents. They’re even better with the children.

But I’m often left pondering what the hell they talk to my kids about all day? And do they monitor peer conversations?

DebtBoy, 5, and DebtGirl, 3, often get in my car declaring they’ll marry each other, their (same sex) best mates, or their cousins, none of which, I explain, is legal.

However, recent statements nearly caused front fences to collide with my Holden: “When will I die? How will I die? What will happen when I die?”

My reflex answers: “not until you’re greyer than Grandad”; “hopefully you’ll be sleeping and you just won’t wake up”; and “you’ll become an angel”. All of which seemed to sate them.

Say it with confidence. They don’t know I don’t know the real answers. I’m Daddy. I know everything.

It dawned on me days later. Sure, the questions reminded me of my own mortality. But I should answer those questions myself.

It seems almost a truism that the monetary affairs of financial advisers are a disaster, like the plumber’s house with the leaky taps, the chef with the empty pantry and the billionaire with the tax problems. (Oh, how ironic is the Rinehart family’s court claims that they’d all go bankrupt if they had to sell the shares held through the family trust?)

Most of my finances are in “excellent condition”. But there’s one area I’d fail.

While I don’t know how or when I’ll die, I have some control over “what will happen when I die”, as a father and husband.

It’s called “estate planning”. And here’s your condensed “Dummies” guide, particularly if a Devil wearing Prada comes to grab you early.

Insurance

This is the foundations. There are four “life” insurances. Three of them assume that you’re still breathing.

Have enough “death insurance” to make sure an untimely passing doesn’t leave your family destitute. Get lots and lots (preferably in your super fund), while you’re young and healthy. Cut back as you age and grow assets. If you die before 50, insurance is likely to be the biggest contributor to making sure your family survive financially.

Wills

Critically important if you’ve had an “unorthodox” adulthood – that is, more than one partner, one marriage, kids to more than one person. If there are blended families, previous marriages, “complications”, you need a will that properly determines who does, and who doesn’t, get your stack of gold coins.

Enduring power of attorney

You’re not dead here, but you’ve lost your faculties. You can’t make decisions for anymore (ie, brain damage) and you need someone to make decisions for you. Who will that be? Probably your partner. But, as backup, someone who won’t be in the proverbial car with you.

Testamentary trusts

Two main benefits. First, control beyond the grave! Second, to make sure that future generations don’t pay unnecessary tax. Testamentary trusts come into existence the moment you die. They allow you to distribute your money over time and tax-efficiently to people who need it most. If you’ve invested wisely, your assets (plus insurance) could be a tidy sum.

Super death benefit nominations

You can’t deal with your super in your will. It has to be dealt with via your super fund, although you can leave it to your estate via your legal personal representative.

Superannuation is a powerful force when it comes to death. Far too many people leave their super to the wrong people, or people who can’t legally have it, leading to disastrous tax consequences.

*****

I have as much interest in dying as Kevin Rudd has in seeing Julia Gillard’s popularity rising in the polls. (Though my eventual death is a vastly more assured than KRudd’s resumption of the prime ministership.)

The main thing I’m thinking about? Are those two beautiful little creatures going to be looked after properly?

Most of these issues are best dealt with by financial advisers, estate planning lawyers and accountants.

And if you can’t answer the third question my DebtKids asked me, then it’s time you spoke to some professionals.

Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au.