The responsibilities and challenges of an estate executor

Posted on 22 September 2023
The responsibilities and challenges of an estate executor

(Feedsy Exclusive)

Being named the executor of an estate is both an honour and a burden. Entrusted with this pivotal role, one carries out the last wishes of a loved one, but the path is often strewn with complexities and unforeseen challenges.

Navigating the Executor’s Terrain

At first glance, the executor’s role might seem straightforward. However, in practice, it’s a demanding role that requires interaction with a myriad of entities, such as banks, real estate professionals, utility companies, the deceased’s superannuation fund, and the taxation office.

Furthermore, an executor’s duties are vast and varied. They encompass everything from overseeing funeral procedures and securing the death certificate to notifying friends and family about the loss. They’re also tasked with locating the will, identifying beneficiaries, gathering a multitude of documents, settling estate debts, documenting estate assets, and initiating insurance and superannuation claims.

Yet, the process isn’t without potential pitfalls:

  • Executors face personal financial risks. Any oversight during the estate’s administration might lead to personal financial liabilities.
  • They often encounter hitches in procuring superannuation death benefits and in coordinating with fund trustees.
  • Executors bear responsibility for any losses stemming from estate asset mismanagement. This can include failure in securing and judiciously investing assets, or lapses in notifying creditors, settling the deceased’s obligations, and recouping debts owed to the deceased.
  • They can incur financial penalties for unduly delaying estate administration or for hasty distributions.

Guidance for a Smoother Transition

For those in the process of drafting a will and designating an executor, a few proactive steps can immensely assist in the estate’s efficient management:

  • Collaborate with a knowledgeable probate lawyer or solicitor specialising in wills and estate management. Their insights, especially regarding local family and inheritance laws, can be invaluable.
  • Given life’s unpredictability, regular updates to your will, insurance policies, and superannuation death benefit details are paramount.
  • It’s crucial to note that superannuation doesn’t fall within your estate and isn’t addressed in your will. Still, you can specify your wishes and arrangements concerning your super death benefit nominations in your will.
  • Seek guidance from your financial advisor and super fund to establish death nominations, thereby streamlining benefit acquisitions for beneficiaries.
  • If feasible, contemplate liquidating your entire death benefit from the super fund while still alive. This proactive step allows for immediate distribution based on your directives or deposits into a bank account, providing easy access for the executor upon your passing.

If you’re ever nominated as an executor by a loved one, it’s prudent to discuss these considerations with the testator (the person who drafted the will). Collaboration with their legal advisor (and financial consultant if available) is also advisable to ensure a comprehensive understanding of the responsibilities and challenges ahead.

In summation, the role of an executor is a multifaceted one, rife with both an honor and intricate challenges. However, with a well-charted roadmap and diligent preparation, the process can be streamlined, ensuring a smoother transition for all involved.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

This information does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.

 

Posted in:News  

Understanding underinsurance in Australia: Steps to secure your future

Posted on 8 September 2023
Understanding underinsurance in Australia: Steps to secure your future

(Feedsy Exclusive)

Australia faces an underinsurance crisis, leaving many exposed to unexpected life challenges. A quick scroll on social media might reveal fundraisers for families who’ve lost a loved one. Tell-tale signs indicate a worrying trend and numerous Australians lack adequate insurance. This article delves into the reasons and suggests how you can avoid becoming another statistic.

What is Underinsurance?

Underinsurance is the disparity between the life insurance an individual or family should possess and what they actually have. Despite some getting default life insurance through superannuation, the gap persists. When delving deeper into income protection and disability cover, the figures are even more concerning.

Why Many Australians are Underinsured:

  1. Perceived Expense: Many believe insurance to be an unnecessary financial burden. Yet, the costs of being underinsured can far outweigh the premiums. The solution? Research, compare, and understand the long-term benefits.
  2. Distrust in Insurance Companies: The fear of claims getting rejected leads some to bypass insurance altogether.
  3. Overwhelming Jargon: The complexities of insurance can be daunting, dissuading potential policyholders.
  4. Overconfidence in Youth: Young adults often feel invincible, relying on a healthy lifestyle to protect them against unforeseen events.
  5. Procrastination: Recognising the importance but postponing the decision can lead to unforeseen complications, especially as one ages or health declines.

Both individuals and businesses, at various stages, grapple with this issue, making it a pervasive concern in Australia.

Who is Most Vulnerable?

You could be at a higher risk of underinsurance if you’ve:

  • Recently married or divorced.
  • Had a child or are planning to.
  • Faced job loss or income reduction.
  • Taken a loan or mortgage.
  • Have dependents like younger siblings or elderly parents.

Recognising your risk can lead to more informed insurance decisions. Start by assessing assets and liabilities, understanding your monthly finances, and comparing your current insurance to what you genuinely require. Neglecting this can leave you exposed during major life events, be it health crises, property damages, or job losses.

Strategies to Counteract Underinsurance:

  1. Consult an Insurance Adviser: Engaging with professionals can demystify insurance for you. A licensed and accredited adviser can help identify gaps in your coverage and offer tailor-made solutions.
  2. Regular Reviews: As life evolves, so do our insurance needs. Marriage, childbirth, or purchasing a home are significant milestones that might necessitate a policy review.
  3. Family Discussions: Open dialogues about financial preparations can lead to collective decisions, ensuring everyone’s on the same page regarding future security.
  4. Stay Updated: Insurance isn’t a ‘set-and-forget’ aspect of life. Regularly updating coverage can ensure you remain protected as circumstances shift.

Underinsurance can spell disaster during life’s unpredictable turns. But with informed choices, regular check-ins, and leveraging financial advice, it’s possible to ensure you and your loved ones remain shielded against unexpected financial burdens. After all, preparation today can guarantee peace of mind tomorrow. If you’re at the onset of your financial planning journey or seeking specialised guidance, it’s advisable to connect with a Financial Adviser. Your future, and that of your loved ones, deserves the security and peace that comprehensive insurance can provide.

 

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

This information does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.

 

Posted in:News  

Blueprint revealed to turbocharge productivity, wealth

Posted on 24 August 2023
Blueprint revealed to turbocharge productivity, wealth

Maeve Bannister and Andrew Brown
(Australian Associated Press)

Lifelong learning incentives and bringing more women into the workforce could drive productivity and leave Australians substantially better off.

The Business Council of Australia has released a report outlining a series of policy shifts it believes will drive productivity growth and help the nation seize its economic future.

If implemented, the council expects the package of reforms to leave every Australian $7000 better off each year after a decade.

BCA chief executive Jennifer Westacott said Australia needed a co-ordinated approach to strengthen its economic resilience.

“We cannot continue to experience record low levels of business investment as a share of GDP where more money leaves the country than comes in,” she said.

“Investment drives innovation, which drives productivity and drives higher wages.

“We cannot continue to have an underperforming skills system that is failing to prepare Australians for the huge changes in the tasks that make up their jobs as the world of work changes.”

The council proposed deepening trade ties with India and Southeast Asia, broad-based tax reform to incentivise investment and a commitment between federal, state and territory governments to decarbonise the economy by 2050.

It also proposed moving away from a “fragmented” education system and transforming it into a sector that encouraged lifelong learning and skills development to prepare workers for future jobs.

A 10-year road map for government and business should also be implemented to advance women’s economic inclusion, with progress reported annually.

“Pieced together (the reforms) would overhaul Australia’s competitiveness and productivity, increase our participation in big global markets and fundamentally drive stronger economic growth,” Ms Westacott said.

Treasurer Jim Chalmers said the report aligned with the government’s economic agenda.

“We need to make our economy more productive, not by making people work harder and longer for less, but by combining the things that we know will deliver productivity growth in the coming decades,” he told reporters in Canberra on Monday.

“We don’t agree with every direction that the BCA has proposed.

“(But) if you look right across energy and housing, human capital, institutional reform, there is a great deal of alignment with the Albanese government’s agenda.”

The treasurer said prosperity and productivity required “a much more modern, dynamic and competitive economy”.

Dr Chalmers will this week release the latest Intergenerational Report, which is expected to show the nation’s population will age rapidly over the next 40 years, leading to a surge in demand for aged care and social assistance workers.

It will also show the nation experienced the slowest productivity growth in 60 years in the decade to 2020.

Posted in:News  

Underinsurance in Australia – How to Avoid Becoming a Statistic

Posted on 10 August 2023
Underinsurance in Australia – How to Avoid Becoming a Statistic

(Feedsy Exclusive)

Every now and then, you may notice a friend, relative or acquaintance post a fundraising plea to help out a family that lost a parent or provider, or to support the education or hospitalisation of an orphaned child left in the care of elderly grandparents. There are many kinds of such posts, and they are indicative of the fact that most Australians are underinsured and even totally uninsured.

Underinsurance refers to the gap between how much life insurance an individual or family needs and the actual amount of life insurance they hold. Even with the default life insurance cover provided through their superannuation, a lot of Australians still do not have the cover required should they need to make a claim someday.

When it comes to income protection and disability cover, even fewer Australians are insured. But why is this so and how can you avoid becoming a statistic?

Why Australians are underinsured

Although like most people Australians understand the value of insurance, they remain underinsured for the following reasons:

  • The insurance-is-too-expensive mindset: People think that insurance or additional cover is an unnecessary costly expense when, in fact, being under- or uninsured is so much more difficult and expensive in the long run. What you can do to avoid this mindset is to educate yourself, shop around and compare policies.
  • Lack of trust in insurers: Some people don’t believe that their insurer will be there to back them up in case a crisis hits them. They’re held back by thoughts of being denied when they make a claim.
  • Inadequate knowledge and resources: People can get lost in the insurance jargon and turned off when they don’t understand what it entails.
  • Confidence in their youth and vitality: This applies to young people, such as those who are in their 20s to 40s. Young adults especially have a tendency to assume that diet and exercise are enough insurance to last them indefinitely throughout their lifetime.
  • Insurance as a low priority: A lot of people know the value of insurance but put off getting it indefinitely until it’s too late or already too expensive.

What also makes underinsurance in Australia a difficult problem is that both individuals and businesses experience it, one time or another.

Who’s at risk of underinsurance?

Although anyone can be underinsured, you are especially vulnerable to it if you:

  • Just got married or divorced
  • Already have or are planning to have kids
  • Experienced recent job loss or a reduction in income
  • Got a loan or mortgage
  • Have people depending on you financially, such as your parents or younger siblings

To reduce your risk of being underinsured, you need to make an honest assessment of your assets and liabilities, or simply your monthly incoming and outgoing. You also need to check the amount of life insurance you have against what you actually need and find ways to reconcile the two.

Why?

Because when you are underinsured, you may find yourself and your family to be financially at risk when an unexpected urgent expense comes up, such as hospitalisation or funeral expenses. Other life-changing events that could leave you vulnerable include losing your house to a fire, flood or unemployment.

Turn things around and avoid underinsurance

As mentioned earlier, there’s no need for you to become a statistic. There’s no reason for you to become desperate when a sudden major financial need arises.

To prevent yourself from becoming underinsured, you can always seek advice from an insurance broker. With the help of a licenced expert who knows the ins and outs of life insurance (or other forms of coverage you need), you can ask questions and get the information you need to make a wise choice. They can help you calculate your coverage requirements so you are no longer underinsured.

You should also make a point of reviewing your life insurance every time you experience a major life event, such as getting married or having a child. Talk to your family about the financial preparations you are making, and get their input and help so you can all look forward to a secure, happy life.

If you need help getting started on your investment journey or require expert financial advice, please get in touch with your Financial Adviser. They’re there to help you secure your future no matter what stage of life you are in.

General Advice Warning:
The information in this App is provided for information purposes and is of a general nature only. It is not intended to be and does not constitute financial advice or any other advice. Further, the information is not based on your personal objectives, financial situation or needs. You are encouraged to consult a financial planner before making any decision as to how appropriate this information is to your objectives, financial situation, and needs. Also, before making a decision, you should consider the relevant Product Disclosure Statement available from your financial planner.

 

Posted in:News  

Types of ethical investing plus the pros & cons

Posted on 3 August 2023
Types of ethical investing plus the pros & cons

(Feedsy Exclusive)

The investment technique known as ethical investing prioritises the investor’s moral, religious and social ideals over financial gain. The reason for this is that a growing number of investors have begun to demand social responsibility from the companies they invest in, primarily because of the rise in dubious and unlawful investment arrangements.

Ethical investing entails fair labour practices, the production of healthy and beneficial goods and services, and abstaining from unethical business activities.

Investors who want to utilise their money to support good causes should consider ethical investment. Those who are interested in this type of venture have several options to choose from.

Types of Ethical Investments

Below is a list of the different types of ethical investments:

1. Environmental, Social and Governance Funds (ESG Funds)

ESG investment strategies target shares in businesses that follow good corporate, social and environmental practices. ESG funds take into account the potential effects that environmental, social and governance factors may have on a company’s performance when making investment decisions.

2. Faith-Based Funds

Faith-based funds (aka morally or biblically responsible, or faith-driven funds) only own stocks that uphold certain religious principles and values. This family of mutual funds rigorously avoids investments that do not match that category. They wouldn’t invest in companies involved with alcohol, anti-family entertainment, gambling, tobacco and similar potentially offensive practices.

3. Impact Funds

Impact investing is a term used to describe an investment approach where ethical improvements or positive results for the community and environment take precedence over fund performance or financial returns. Examples of this include investing in non-profits or businesses producing or using clean technology.

4. Socially Responsible Investing Funds (SRI Funds)

Socially responsible investing entails eschewing investments in contentious industries or companies that manufacture or provide addictive substances or activities or whose products or services go against the principles of social justice, sustainability and clean technology. This is why SRI funds steer clear of businesses involved in gambling, guns and ammunition, tobacco, alcohol and oil.

Pros and Cons of Ethical Investing

It’s important to be aware of its pros and cons, so you know exactly what to expect when ethical investing.

Pros:

  • When an ethical holding company performs well, the investor benefits financially and emotionally as the business shares their ideals.
  • Investments in ethical funds have a great potential to increase dramatically as more people become aware of them.
  • The growing relevance and popularity of ethical investing will motivate other companies to raise the bar on their ethical standards in order to attract investors.

Cons:

  • It takes a lot of investigation or due diligence to verify that investing in a business is in line with the investor’s values and views because it is not a passive strategy.
  • Since ethical investment may not offer the best returns, the investor may need to forgo financial benefits in favour of upholding their ethical philosophy.
  • More work and research goes into finding the right investment, so the costs for ethical investing can be higher compared to conventional investments.

That being said, the number of investors who want to make a positive impact on the society and environment is expected to continue growing.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

 

Posted in:News  
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