4 essential tips to shape your financial legacy

Estimated reading time
 5 min

Learn all about

• The importance of writing a will and estate plan
• How to tidy up your finances while you’re alive
• Why you might consider life insurance

Ensuring your loved ones are financially supported when you’re no longer around is priceless.

It can help ease the stress and emotional burden of covering end-of-life expenses, such as paying for your funeral. But planning for a life without you goes beyond sorting out finances. You might also want to think about personal reminders that you can leave behind, like your jewellery or vinyl collection.

Shaping your financial and personal legacy requires some careful planning. If you’re not sure where to start, then you’ve come to the right place. We’re sharing four tips to help you create your financial legacy so that your kin feel supported when you’re no longer here.

1. Write (or update) your will and estate plan

There’s no time like the present to write or update your will and estate plan. While these terms are often used interchangeably, wills and estate plans are two different things.

• A will is a document that explains how you want your assets (also called an ‘estate’) distributed and to who.
• An estate plan is the bigger picture of your end-of-life plan. It usually contains a will and other important documents, like a power of attorney (a legal document that appoints someone to make legal and financial decisions for you) or an advanced care directive (which outlines your healthcare preferences).

When writing or updating your will, you’ll need to think about who you want to carry out your wishes (known as an executor). Your executor should be someone you trust to comfortably and compassionately engage with your beneficiaries (people nominated in your will who might receive parts of your estate).

If your circumstances change, such as getting married or divorced, selling a business or retiring, it’s a smart idea to review your estate plan. For example, if you get married, you might give your spouse power of attorney.

It’s also a good opportunity to think about how you want to gift your assets, such as passing down a family heirloom or donating some money to your favourite charity.

Read more about how to write a will

Read more about how to gift your assets

2. Tidy up your finances now

Organising and tidying up your finances now can pay off when you’re gone. It can help your beneficiaries feel more prepared to navigate life without you and leave them less admin to think about.

Here are some ways you can tidy up your finances:

• Start by listing all your assets and their monetary value such as your home, car, jewellery, furniture or savings. This will help you spot any updates you may need to make to your will and simplify things for your executor.
• Pay off as much debt as you can. If you leave debt behind when you go, your executor might have to pay it off with your assets which can leave your loved ones without as much as you had hoped.
• Check if you have multiple super accounts and consolidate them. It’s also a good idea to check for any lost super that might be in your name. Make sure your tax returns, bills, and other financial commitments are up to date.
• Plan for any taxes that might affect your beneficiaries when they inherit your assets, such as capital gains tax related to properties in your estate. Remember to always seek independent tax advice from a registered tax agent.

  Hot tip:

Want to keep it simple when organising your finances? Start with the basics – think budgeting, checking your super and more. We cover all the financial essentials to help you find the right information to get your finances in order before you’re gone.

Read more on how to tidy up your finances for your beneficiaries

3. Talk to your beneficiaries

Talking about death can be difficult. But it can help alleviate any anxieties your family or friends might have. Be open and honest about how you want your end-of-life wishes carried out so that everyone is on the same page.

Here are some tips to help you navigate this tricky conversation:

• Let your loved ones know in advance that you want to talk about your will and estate plan. Host the conversation at a neutral place where everyone feels comfortable and safe.
• Don’t just make it all about who’s getting what. Explain where you’ve kept important documents, your preferences for long-term care, and who you’ve named your executor (and why you chose that person).
• Have your will and estate plan on hand to talk through.
• Explain why you made certain decisions so that everyone is aligned on your end-of-life wishes.

4. Consider life insurance

Life insurance can financially support you and your family if something happens to you. When considering life insurance, there are different products available:

• Life cover will see your beneficiaries receive a lump sum when you pass away.
• Total and permanent disability (TPD) insurance provides a lump sum to help with rehab and living costs after acquiring a permanent disability.
• Trauma insurance provides financial support if you’re diagnosed with a major illness.
• Income protection insurance can cover some of your income if you’re unable to work because of an illness or injury.
• Funeral insurance gives your loved ones a lump sum to help pay for your funeral.

You might have life cover through your superannuation provider so it pays to check and see what you’re entitled to.

Read more about life insurance