Money musts before you die

Don't leave behind a financial mess

It might be hard to think about, but if something happened to you, having your financial affairs in order will make a difficult time a little easier on your family.

You need to ensure that your documents are stored in a secure place that your loved ones can find. They need to know what assets you have, what insurance policies are in place and how to access your superannuation or life insurance.

Here are some simple steps you can take to protect the important people in your life.

Check bank accounts and other assets

Can your bank accounts be accessed by your partner when you die? If you're unsure, check with your bank.

If accounts are in your name only, how would your family access funds? Do you need to set up an emergency fund to cover things like funeral expenses, that more than one person can access?

Review your assets and work out which ones will be passed directly to beneficiaries and which ones will have to go through your estate. For example, if you and your partner own a property together as joint tenants, the property will automatically transfer to your partner when you die. However, the same property owned solely by you will become an estate asset and will need to be dealt with in your will.

Review your life insurance

If you have people in your life who rely on you for financial support, such as a partner or dependent child, having life insurance is one way to make sure their financial needs will be taken care of if something were to happen to you.

Life insurance (also known as death cover) will pay a lump sum to your beneficiaries when you die. This money could be used to pay off your mortgage or other personal debts or to provide an income for your dependents.

You might also want to consider getting total and permanent disability (TPD) cover, which will pay a lump sum if you become totally and permanently disabled. If this happened, not only would you lose your income, but you may have high care costs.

Life insurance through super

Most super funds will automatically provide you with basic death and TPD cover so you may already have some cover within your superannuation fund. See insurance through super for the pros and cons.

Super and life insurance beneficiaries

Review the beneficiaries you have nominated with your super fund or life insurance policy, especially if you have separated from your partner or your children are now adults.

Make sure you understand the tax implications of your beneficiary nominations. For example, a super benefit may pass to a spouse tax-free but may be taxable in the hands of adult children. For more information on how tax is calculated on super death benefits, see tax and super.

Involve your partner in your finances

If your partner is not involved with your finances, try to get them involved. Introduce them to your accountant, financial adviser, lawyer, or any other professional you use to help manage your affairs.

If something unexpected were to happen to you, your partner should at least have a basic idea of what assets and liabilities you have and who helps you manage them.

Consider leaving detailed instructions on how to access joint assets such as bank and investment accounts in a secure place. Do not store passwords with log in details.

Write or update your will

Having a valid will ensures your assets go to the people you want to have them. You might also consider granting someone you trust an enduring power of attorney to manage your affairs should you lose mental capacity.

It's a good idea to review your will and powers of attorney on a regular basis or whenever your circumstances change. Be aware of events that may invalidate your will, for example, a new marriage will void your will but divorce will not.

Guardianship of children

A will can also contain details of who will take legal guardianship of dependent children if something happens to both of you. This person is usually someone you trust to raise your children in a similar way to the way you are raising them, and someone who has the emotional and financial capacity to take on the responsibility.

Setting up a trust

If you have a lot of assets or a complicated family structure you may consider using a trust to hold your assets. A family trust can be created while you are still living. A testamentary trust is created by instructions in your will, in the event of your death.

You should ask a legal professional to check your estate plan to make sure it is valid.

Keeping your important documents safe

To make sure the person managing your estate can easily locate all of your financial information, set up a file listing all your assets, liabilities, insurance policies and other financial information.

The file should include all relevant details such as:

  • the financial institution, account number, name of the account
  • policy provider, policy number, date the policy commenced and is due to expire
  • any other information that may be required to accurately identify you or your account.

You should also include the latest account statement for these documents in the file. Don't forget to include financial products where you receive correspondence by email.

Consider keeping a hard copy and an electronic copy of this file. Keep the electronic copy in a secure data file and the hard copy in a locked filing cabinet that only the person managing your estate has access to. Do not include passwords or other access details that only you should know.

Here's a full list of all the important documents you should put in a safe place.

Don't leave behind a financial mess when you die. Develop a plan and get your paperwork in order to make sure your loved ones have one less thing to worry about when you've gone.

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Last updated: 13 Feb 2019