(This article was originally written in 2015, but is being republished on request for articles on estate planning and giving to children and others.)
“A man’s death is more of a survivor’s problem than of himself.” – Thomas Mann
“The beginning and end of all human undertakings are sloppy.” – John Galsworthy
These quotes from Mann and Galsworthy are usually correct, but not necessarily so. Determining what happens to one’s assets when one dies is certainly important in anyone’s life. It never surprises me how little people think about planning real estate or creating a lasting legacy. It’s bad enough that an estimated 45% of Australians don’t have a valid will and most don’t have a binding death nomination for their retirement pension.But save your money first How many of us spend even a fraction of the time deciding what to do with our money, just like every other time? Doesn’t resonate with me. Maybe it’s my inner positive planner and I’m an outlier.
Your religious beliefs aside, let’s say you leave this world and look down from heaven on distributing your hard-earned money to your loved ones.As Shakespeare wrote in Hamlet, “Whatever dreams may come as we shuffle this mortal coil, you must give us pause.” The children are arguing over whether to sell their parents’ house. A son-in-law you barely knew is claiming rights. Your spouse met her five screaming children and her new partner from a previous marriage. Your sister, she says, told her you would always support her brothers and sisters. Your old house has family members who will get your stuff whenever they can.
You thought you were in Heaven and you have gone to Hell!
work on the basics
When thinking about estate planning, I believe it is essential to cover the following basics and keep the marbles intact while you are alive.
- Make sure your wishes are clear, clear and in writing. Written instructions usually mean the will, but in addition to this, to avoid misunderstandings, a 1-2 page “plain English” summary (checked by the attorney for consistency with the will). need).
- Be prepared for all situations: if you died, if your partner died, if you died together.
- “Complete the package,” ensuring a permanent power of attorney (financial/financial decisions) and permanent guardian (health decisions) has been appointed, and a documented advance care plan (resuscitation, organ supply, and handling of the transplant location). I want to take care of him when the time comes for his natural death).
- Ideally, discuss your intentions with your family so they have a chance to contribute and understand before you are no longer influential.
- Develop a strategy to ensure that your wealth is properly managed by someone you trust who knows how to handle wealth.
Beyond these basics, we want to focus on the possibilities of both creating a multi-generational legacy and enjoying giving while we are alive.
Create a fund for future generations
While you are alive, it is natural to care for your own children and grandchildren that you know and cherish. But what about their children? What could benefit future generations of your descendants?
Given sufficient resources, one idea is to establish trusts aimed at meeting specific costs for your immediate descendants (your children, your children’s children, their children, etc.).The costs that come to mind are what I think ‘We need a safety net cost’ Medical insurance, trauma insurance, school education, higher education, etc. Plan for only his 50% of the cost of higher education so that the recipient can get an incentive to “get in the game” and complete the studies of their choice.
Imagine how satisfying it will be to know that your great-grandchildren can be confident that they are well-educated and healthy, no matter what your finances are. No one knows what the future holds as many family fortunes are being destroyed by poor investments and overspending. Australia is facing decades of rising budget deficits, covering both health care and education costs. It could go further down the US road of user payments and denial of service. Future school, college and hospital costs are difficult to estimate, but they are very likely to be much higher than they are today.
Trust requires an independent fiduciary and must leverage investment expertise. So the money will last as long as possible into future lifetimes (and future descendants may themselves have the means to contribute to the longer lasting trust). In practice, descendants wishing to bear such costs would apply to the trustee. You “force” them to give another gift (one I’m passionate about) and say that the recipient must first complete a basic course in financial literacy before being eligible to join the trust. You can also claim
Imagine the day your daughter’s grandson graduates from college and becomes a doctor. And imagine a day to toast to you for making this event possible through your vision and generosity.
help your children while you are alive
If you start having children at age 30 and live to be 90, your children may retire when you inherit your property. If they’re already doing well, they probably don’t need that money.
Buying a first home if you live in the crazy real estate market on the east coast of Australia and want to live in a similar place and possibly near you when your kids leave home you may have a hard time doing it. An exorbitant entry level to enter the real estate market.
Assuming your own financial needs are met, there is no better way to help your children than by helping them with their first purchase. Consider gifting a deposit or some type of interest-free loan . That way, you can reuse your capital one day or protect it in a divorce situation.
Now, regardless of how much you love your child’s partner, things often change, so it’s common to arrange a ‘gift’ as a loan. Contact an attorney to get the loan agreement drafted properly. This is because it can determine the outcome of the “gift” for years to come. You probably don’t want to leave half of that to your son or daughter to fund someone else’s dream home.
leave a lasting gift to society
In a letter to the Gates Foundation, Buffett said:
“I want to give my kids enough to make them feel like they can do anything, but not so much that they don’t feel like doing nothing.”
I am a big fan of this quote.
Again, if your resources are sufficient, to leave a lasting gift to society after you provide for your family, establish a private subsidized fund or subsidize it alongside a public subsidized fund. There is no better way than setting up a fund. Any money put into a vehicle like this is fully tax deductible. Funds are invested within a subsidized fund (tax exempt environment) from which a minimum annual contribution of approximately 5% of the account balance must be donated to charity. Fund investments can last for years and generate a never-ending stream of donations to charities.
(I declare my interest here as I am the Founder and Chairman of the Australian Philanthropic Service, a non-profit organization dedicated to the installation and management of such vehicles.)
It wasn’t until I turned 50 that I started thinking about death. Perhaps this is because I was looking at the age of my parents. That realization comes by paying great attention to how I can help people while I am alive and after crossing the great try line in the sky!
Chris Cuffe is Portfolio Manager of the philanthropic trust Third Link Growth Fund and Chairman of Australian Philanthropic Services. Chris is involved in many other groups as a director, chairman and investment professional. This article is general information and does not take into account your specific personal situation. The views expressed are his own and do not constitute personal financial advice.