Always look on the bright side of death /
Just before you draw your terminal breath
The “Don’t Worry, Be Happy”, whistle-your-blues-away, approach to your impending demise might be a little hard to put into practice. While Monty Python’s “Life of Brian” got us laughing about it, death itself is one of life’s imponderables.
Hey, it’s possible that science guru Dr Karl Kruszelnicki is right. He reckons Gen X might be “the first generation to live forever … with a healthy 18-25-year old body”. Yep, he reckons so. In which case, we won’t have to contemplate that whole, nasty, death caper.
(But Dr Karl said that in 2004 when this Gen Xer’s body was 33. That same body is now 42 and looking decreasingly, in an exponential manner, like a 25-year-old’s body anymore.)
While eternal life might eventually happen, it probably won’t be in our lifetimes. So, sorry to bum you out, but you need to prepare to die.
Have you ever put any thought into it?
Probably not much, for most of you under 50, I’m guessing. It’s not something that, when you wake up on Saturday morning to take the kids off to swimming, you’re thinking: “Great, the afternoon is free! I’m going to start preparing for my death”.
But, in all honesty, you sorta need to.
Putting some thought into the day you fall off the perch is called “estate planning”. Sure, it’s a phrase with less appeal than clipping your toenails, but it’s really important, particularly for your family.
Not getting it right could cost even the average Australian $100,000, but potentially many multiples of that. And by “average Australian”, I mean your family. Because don’t forget, you, personally, are pushing up daisies.
Proper estate planning is important for everyone. Few actually do much about it. But it becomes crucially important sometime between when the little blue line appears on that stick and making your fortune, or at least amassing a few assets.
But some basic estate planning doesn’t have to include hiring an army of expensive professionals. It’s largely about leaving “the right assets to the right people at the right time”.
Here are some of the basics.
Start with your super fund. I don’t care whether your balance is $10,000 or $1 million. Who is your super fund death benefit payable to? Is it your current partner? Or a girlfriend/boyfriend/defacto from 10 years ago?
Seriously, from my experience as an adviser, it’s often made out to your mum (but rarely dad. Poor dad!), brothers and sisters, even though you moved out of home 10-plus years ago and you’ve been married for five.
Life insurance. On top of your super, you probably have some insurance inside your fund. In the event of your death, add up your super balance and your insurance (a topic I’ll tackle in my next column) and many people who haven’t thought about their super might be leaving a few hundred thousand dollars to someone. It’s time to give a damn about who that is. Do you really want that person you were dating for a year 15 years ago to pick up $300,000, to take the bloke she dumped you for on a world cruise? It could happen.
And there’s your will. For many, this can be a simple document. But if you’ve got any complications in your life (Brady Bunch families, small businesses, estranged relationships or children, etc), then you’ll need some help drafting it.
It’s about there that you start to get into the complicated stuff.
Do you run your owns small business? How’s it set up? Are you running it as a company, or a company and trust? Have you considered a discretionary family trust to help manage your business affairs and passing that on after your death?
Are you part of the million-strong army of self-managed super fund trustees? Modern SMSFs can be awesomely powerful tools for intergenerational wealth transfer, in a tax effective manner.
And then there are “testamentary trusts” (see Nick Bruining’s piece today/opposite). You want to control who gets what from beyond the grave in a good witch/bad witch sort of way? This is the vehicle to do that, and tax effectively too.