When it comes to planning for the future, having a Will is an important step. It gives you an opportunity to document how you would like certain assets to be distributed after your death and who you would like to manage your estate. But a Will is not necessarily the complete picture. Understanding the Will vs estate plan distinction can help you identify whether there may be gaps in your current arrangements. While a Will generally focuses on what happens to assets that form part of your estate after you die, estate planning takes a broader view. It considers how different assets and financial structures may be managed, who can make decisions if you are unable to do so, and how your wishes can be coordinated across your wider financial affairs.
For individuals, couples and families, this distinction becomes particularly important as life and finances become more complex.
Will vs Estate Plan: What Does a Will Actually Do?
A Will is a legal document that sets out your wishes for the assets that form part of your estate. It generally allows you to nominate beneficiaries, appoint an executor to administer your estate and, where relevant, document wishes regarding guardianship of minor children.
These are important decisions, which is why having a properly prepared and up-to-date Will can form a valuable foundation for your estate planning.
However, a common misconception is that a Will automatically determines what happens to everything you own or control. Depending on how your financial affairs are structured, some assets may not form part of your estate and may therefore be dealt with separately.
This is where the distinction between a Will vs estate plan becomes important. Your Will may provide instructions for your estate, while your broader estate plan considers how the different pieces of your financial life work together.
What Is an Estate Plan?
An estate plan is a broader framework designed to help manage your financial and personal affairs, both during your lifetime and after your death.
Your Will is generally one component of that framework. Depending on your circumstances, estate planning may also consider superannuation, insurance, asset ownership, trusts, business interests and arrangements for managing your affairs if you lose capacity.
It may involve both financial and legal considerations. The objective is not simply to decide “who gets what”. It is to consider how your assets and financial structures interact and whether your arrangements collectively reflect your intentions.
For someone with relatively straightforward finances, this may be a simple exercise. For someone with significant superannuation, investments, a business, a blended family or assets held through different structures, there may be considerably more to consider.
What Doesn’t Your Will Automatically Control?
One of the most useful ways to understand estate planning is to consider the assets and arrangements that may sit outside your Will.
- Superannuation is an important example. Your super does not necessarily form part of your estate, and how a death benefit is paid can depend on the rules of your super fund and any valid beneficiary nomination you have in place.
- Life insurance may also need separate consideration. Depending on how a policy is owned and how beneficiaries have been nominated, proceeds may not simply be distributed according to your Will.
- Jointly owned assets can operate differently too. Certain assets owned jointly may pass directly to the surviving owner rather than being distributed through the deceased person’s Will.
Trusts, companies and other structures introduce further considerations. An individual may control or benefit from assets held within these structures without personally owning those assets. Estate planning therefore needs to consider not only ownership, but also control and succession arrangements.
This is why looking only at your Will can leave important questions unanswered.
Where Does Superannuation Fit In?
For many Australians, superannuation represents one of their largest financial assets. Yet it can easily be overlooked when people think about estate planning.
Superannuation death benefits are generally dealt with under the rules applying to the super fund rather than simply following the instructions in a Will. This makes beneficiary nominations an important part of the broader planning process.
Different nomination arrangements can operate in different ways, and their suitability will depend on your personal circumstances. The key is ensuring your superannuation arrangements are considered alongside, rather than separately from, your overall estate plan.
For example, updating your Will while leaving an outdated superannuation nomination in place could mean your arrangements no longer work together as intended. Reviewing the full financial picture can help identify these potential inconsistencies.
Estate Planning Also Means Planning for Incapacity
Estate planning is not solely about what happens after death. It can also consider what happens if you are alive but unable to manage your own affairs.
Depending on where you live and your circumstances, documents such as an Enduring Power of Attorney and other state-based arrangements may allow trusted people to make certain financial, personal or lifestyle decisions on your behalf if required.
This raises an important question: if illness or an accident left you unable to manage your finances, who would be able to step in?
Thinking about incapacity can be just as important as deciding how assets should eventually be distributed. Appropriate legal advice is important when establishing these arrangements, particularly as requirements and terminology can differ between Australian states and territories.
Estate Planning for More Complex Families and Finances
Estate planning can become increasingly important as family circumstances and financial structures become more complex.
Blended families are one example. A person may wish to provide for a current partner while also preserving assets for children from a previous relationship. Previous relationships, financially dependent family members and changing family dynamics can all add another layer to the planning process.
Business owners may also need to consider what happens to ownership or control of their business. Likewise, people with trusts, investment structures or substantial superannuation balances may have assets and interests that cannot be addressed simply by listing beneficiaries in a Will.
Complexity does not necessarily mean something is wrong with your arrangements. It simply makes coordination more important.
Why Estate Planning and Financial Planning Should Work Together
Estate planning decisions rarely exist in isolation from the rest of your financial life.
Superannuation beneficiary nominations, life insurance, investment ownership, business interests and tax considerations can all interact with the arrangements established through your estate plan.
For this reason, financial advisers and appropriately qualified legal professionals can play complementary roles. A solicitor can provide advice on legal documents and estate planning structures, while a financial adviser can help consider how your superannuation, investments, insurance and broader financial strategy interact with those arrangements.
Taking a coordinated approach can help ensure different parts of your financial life are working towards the same objectives, rather than being considered independently.
When Should You Review Your Estate Plan?
Estate planning should not necessarily be viewed as something you complete once and then forget about.
Major life events are a natural opportunity to review your arrangements. Marriage, separation or divorce, having children, entering a new relationship, buying or selling a business, retirement or a significant change in wealth can all alter what you want your estate plan to achieve.
Changes affecting the people named in your arrangements matter too. For example, an executor, beneficiary or nominated decision-maker may die, become unwell or simply no longer be the most appropriate person for that role.
Even without a major life event, reviewing your arrangements periodically can help ensure they continue to reflect your current family circumstances, financial position and wishes.
A Will Is an Important Start, Not Necessarily the Finish
The Will vs estate plan distinction is ultimately about looking at the whole picture.
A Will remains an important part of planning for the future, but it may not determine what happens to every asset or address how your financial affairs would be managed if you lost capacity. A broader estate plan can bring together your Will, superannuation, insurance, ownership structures and other arrangements to create a more coordinated approach.
If you already have a Will, the next question may be whether the rest of your financial arrangements support it.
Review Your Broader Financial Strategy
At Priority Advisory Group, our Personal & Family Wealth team can help you consider how your superannuation, investments, insurance and broader financial arrangements interact with your estate planning objectives. Where legal advice is required, appropriately qualified legal professionals can assist with the preparation and review of legal documents.
To discuss how your estate planning considerations fit within your broader financial strategy, contact Priority Advisory Group on 1300 349 188 or visit our contact page.
Please note the information provided within this article is general of nature and is not a personal advice recommendation. Prior to considering strategies discussed in this article we recommend you seek personal financial advice. Please be aware that, without the benefit of financial advice, you may be committing yourself to financial strategies or products that are not appropriate for your overall personal situation, needs and objectives.