When planning your dream holiday, why on earth would you think about overseas travel and estate planning in the same sentence? The truth is that travelling overseas is often a trigger for thinking about what would happened if you died or were injured while overseas.
Unfortunately, people do die while on holidays. Five people have died as a result of Victoria’s worst civil aviation accident in 30 years, after a plane crashed into a shopping centre near Melbourne’s Essendon Airport.The men were heading to Tasmania’s King Island to play golf when their Beechcraft charter suffered “catastrophic engine failure” moments after taking off from Essendon Airport at 9am. This sad event reminds us that none of us are invincible while travelling. All four American tourists were here in Australia on a holiday of a lifetime.
Overseas Travel And Estate Planning: What To Think About
While you are planning your holiday, make sure you also think about your estate planning. Good estate planning will take into account the possibility of either death or incapacitation while you’re away.
Last Will and Testament
Everyone should have a will and, if you don’t, before traveling is a great time to draw one up. If you already have a will, review it to make sure it still reflects your wishes and takes into account any recently acquired property or births, deaths, marriages, divorces or other major life events since it was written.Communicate to your family members where your will is located so that in the event of your death, their frief isn’t compounded by a missing will.
Guardianship and Care of Minor Children
If you have children under the age of eighteen, you should name a guardian to physically take care of them in the event that something happens to you. You can do this in your will, and you can also make provisions for their financial well-being in the form of a testamentary trust, as well as naming someone to oversee their financial affairs. This may be of particular importance when two parents are travelling together.
Testamentary Discretionary Trust
A testamentary discretionary trust is a type of trust created under a will, comes into existence only upon the administration of the deceased estate and offers benefits and flexibility to your beneficiaries. A testamentary trust can provide significant asset protection, which will be important if your surviving spouse or an adult child is at significant risk of litigation or owns a business or is at risk of divorce. A testamentary trust allows income splitting because all beneficiaries, including those under 18, receive the benefit of the full income tax free threshold, and income above that amount is taxed at normal adult rates. You can tailor the terms of a testamentary trust to suit your particular circumstances. For example, you can restrict access to the assets in a testamentary trust in appropriate circumstances, such as where a major beneficiary has an addiction or is unable to manage a significant inheritance.
Advance Health Directives
An advance health directive is a legal document that expresses a person’s health care preferences for when you’re unable to make those decisions for yourself. Advance health directives detail the medical directions you want followed in the event you become seriously ill or incapacitated and usually include feeding and breathing tubes, life support, and life-sustaining procedures. This document also gives someone else the authority to make health care decisions for you should you be unable to do so. It’s important to think about not just dying overseas, but being injured or falling ill while overseas.
Enduring Power of Attorney
An enduring power of attorney grants someone of your choice the authority to make decisions for you if you are unable to do so. You can specify the duties they can perform, which may include handling financial and legal claims, dealing with insurance and retirement benefits, managing property, entering contracts for services, and more. An enduring power of attorney remains in effect while you are travelling and if you become incapacitated. You can set limits on how much power the attorney is given and in what specific circumstances.
It is particularly important to be sure your life insurance policies are updated before traveling, especially regarding your named beneficiaries. You may also wish to take another look at your other insurance policies, such as auto and homeowners, to check that they are up-to-date as well. What if there’s a fire in your home while you’re away?
Superannuation Binding Death Nominations
Your will cannot dictate what happens to your superannuation when you die. A binding death nomination specifies who you’d like the superannuation to go to, and because super often includes a life insurance policy, this asset is likely to be quite large. It’s important to note that many super funds do not allow Binding Death Benefit Notices, and there is no obligation on the super fund trustee to carry out your wishes in this regard.If you have a complex situation, a self-managed super fund might be a better choice.
Before you travel is also the perfect time to gather information for all of your financial accounts, including banking, savings accounts, mortgage payments and debt repayments, credit cards, and investments and put it together in one file. Be sure to tell your loved ones where to find this information should they need to do so. Combining overseas travel and estate planning often means communicating to your family where they find all the critical information they might need.
These days it’s no longer enough to plan for the distribution of your physical assets after your death—you also should be thinking about your online life and digital legacy as well. While you may already have made provisions for bank or credit accounts, consider your email and social media accounts, as well as any websites you own or operate. Plan for who you would like to have access to your digital assets and make sure your wishes—as well as logins and passwords—are recorded in a safe place.
The final major consideration you need to give when thinking about overseas travel and estate planning is to ensure you have enough time! Don’t try to get it done a week before you leave – you’ll need several weeks or months, depending on your circumstances.
Now that you can see how overseas travel and estate planning go together, make sure you make time to get your affairs in order. We offer a FREE, ten-minute phone consultation. Contact us today!