Financial security for your kids: Wills & life insurance
As parents, doing the hard work to guarantee the financial security of your children is a top priority. While it’s a topic that nobody likes to really dwell on, planning for the unexpected is both sensible and an act of love for your family. Two essential parts of this planning are wills and considering life insurance – tools that can help to provide a safety net for your loved ones. Here’s how to get started.
Understanding wills: A roadmap for your estate planning
A will is a legal document that outlines your wishes regarding how your assets will be distributed and how any children will be cared for after your passing. For parents, having a will is not only responsible but also a testament to your dedication to your children’s future.
Consider that more than half (56%) of parents say starting a family is more expensive than they initially expected, according to our Choosi Cost of Kids Report 2023. There are so many expenses to factor in throughout life – from nappies to birthdays to sporting activities to education. The latter is something that 44% of parents say they didn’t save enough for.
So, a quick visit with a wills and estate lawyer can give you the planning advice you need to protect your loved ones for years to come.
“Wills and estates lawyers have the legal expertise to not only know what the legal requirements are for a legally enforceable will, but also to make sure that your will has the intended effect,” says Delphine Copeland, Solicitor Director – Copeland Estates Legal.
“Not all assets can be captured by a will, and part of estate-planning advice is confirming what assets will go into your estate and your will, and how to make sure those assets not captured by your will are distributed according to your wishes. Some assets don’t go through your will, even if you’ve written in your will that they’re to be gifted. Joint assets and superannuation, for example, can form part of the notable exceptions to assets that don’t go through a will.”
Investing in life insurance: Ensuring financial security for your family
Life insurance is a financial product that’s designed to give your loved ones financial support in the event of your death. It’s something that can secure your family’s financial future and can be especially significant for your children. Here are two key aspects of life insurance that might positively contribute to your children’s financial future:
- Building an inheritance: Life insurance lets you leave a financial legacy for your children. In the event of your passing, the life insurance payout could be part of their inheritance, giving them a solid financial foundation on which to build. This money can be used to cover expenses like further education, purchasing a home or starting a business.
- Covering schooling costs: One of the biggest financial commitments parents make is funding their children’s education. With the rising cost of schooling in Australia, this could be a huge financial burden if you aren’t around to support them. The good news is that you could structure your life insurance policy to cover these educational costs, ensuring your children have access to a high-quality education.
Crafting your will: Guidelines for financial protection
“While it can seem scary, creating a will can be as simple as making an appointment with a wills and estates lawyer,” says Delphine. “A valid will has basic requirements such as being in writing and signed by the will-maker in the presence of two witnesses over 18 years of age.
“Wills should include important details such as who you want to appoint as your executor, and it should be clear in making gifts of assets or dividing your estate between your loved ones. If you have young children, your will can specify what age your children will inherit and who looks after their inheritance until that time. Your will should also contain safety-net provisions of what happens in case of a loved one predeceasing you.”
Here are some key aspects to consider when creating your will:
Consulting an estate planning lawyer: Engaging the services of an estate planning attorney is a smart decision. They can guide you through the legal requirements so your will is valid and accurately reflects your wishes. An attorney can also help you factor in any tax implications and strategies for distributing your assets.
Identifying beneficiaries: Clearly identify your beneficiaries in your will. Make sure their names and details are accurate to avoid any confusion or disputes about your intentions.
Appointing a guardian: If your children are minors, you’ll need to nominate a guardian in your will. This person will be responsible for their care and upbringing if both parents pass away, so choose someone you trust who shares your values and has a similar parenting philosophy.
Documenting your wishes: Be specific in your will about how you want your assets distributed. Whether it’s setting up trusts for your children’s education or specifying how any life-insurance payouts should be allocated, make your wishes very clear. Also make sure there is both a physical copy of your will and digital files that you can access from anywhere at any time.
“Ideally, a will should give powers to the executor so they can look after your estate as best they can for the benefit of your beneficiaries,” Delphine says. “You may also wish to include your wishes as to funeral, burial and cremation in your will. A will simplifies paperwork, confirms your wishes and reduces stress to your loved ones.”
Providing security after you’re gone
Planning for the financial security of your children is an act of love. Wills and life insurance are both powerful tools that could give your family the financial safety net they deserve, ensuring your children’s future is financially secure even if you’re no longer here to provide for them.
By considering investing in the right type of life insurance and crafting your will thoughtfully, you could create lasting financial security for your children. Start comparing life insurance with Choosi today.
17 Oct 2023