Estate Planning
What estate planning actually covers
A will directs what happens to assets you own personally. A surprising amount of wealth sits outside it — superannuation, life insurance, assets held in a family trust or company, and anything owned jointly. Estate planning is the work of making sure every one of those passes to the people you intend, in a form that is useful to them and taxed as lightly as the law allows.
The parts people miss
- Superannuation is not covered by your will — it passes under a binding death benefit nomination, and an out-of-date or lapsed nomination is one of the most common and costly errors we see
- Tax on death benefits — super paid to a non-dependent adult child can be taxed at up to 17%, and there are legitimate strategies to reduce that
- Testamentary trusts — not needed by everyone, but they can protect an inheritance from relationship breakdown, bankruptcy, or a beneficiary who is not ready to manage it, and can be significantly more tax-effective for minor children
- Loss of capacity — an enduring power of attorney matters as much as a will, and is needed far more often
- Business interests — if you own a business, your estate plan and your buy/sell arrangements have to say the same thing
How we work with your solicitor
We do not draft wills — that is your solicitor's work, and it should be. What we do is the financial architecture underneath: how superannuation is directed, how insurance is owned, whether a testamentary trust is warranted, and what the tax outcome looks like for each beneficiary. We then brief your solicitor so the documents reflect the strategy, or introduce you to one if you do not have a solicitor.
When to review it
Estate plans go stale quietly. The triggers worth acting on are a marriage or separation, a death in the family, a child turning eighteen, buying or selling a business, a substantial change in wealth, or moving assets between structures. If none of those have happened and it has been more than five years, it is still worth a look — the super and tax rules have moved even if your life has not.
Must do's:
Tax efficient asset transfer
Ensuring your estate is setup to ensure a tax efficient transfer, will ensure your estate is not taxed over and above the legal requirement.
Consider the need for Testamentary Trust
While not always needed, Testamentary trusts, can provide you with the flexibility and control to distribute your estate as you plan. This structure can be useful, when beneficiaries are not capable of managing their inheritance, due to age, potential disability or possible irresponsible money management.
Asset Protection
Blended families have become more common in recent years, and asset protection is crucial. Protecting assets from bankruptcy, relationship breakdowns, or beneficiaries with addiction, can be a sensitive issue, which requires professional financial advice.
Adequate provisions
Ensuring adequate provisions are made, can minimise the ability of potential beneficiaries to challenge your estate.
Government Benefits
The gift of an estate, can have a detrimental effect to a person's government entitlements, and as such it is important to consider each beneficiaries situation. There are a number of strategies to assist in minimising the effect on beneficiaries government benefits.
Dealing with incapacity
As uncomfortable as it may be, it is important to ensure you make provisions for who will be responsible for your medical and financial decisions in the event you become incapacitated.
Misconceptions / Don'ts:
Invalid Will
A homemade or poorly drafted will, may not constitute a legally binding will. Assuming a document is valid, may mean your assets and estate pass to the wrong person, or could lead to costly legal disputes by your beneficiaries.
Not Reviewing Will
Births, Deaths and Marriages are the big three events which usually prompt clients to review their will. Reviewing your circumstance regularly, is the only way to ensure you are not left with an out of date Estate plan in the event of a "Death". Common issues include leaving assets to former spouses or parents which results in costly legal battles.
Leaving super to kids
Naming adult children as beneficiaries of superannuation, can have some unforeseen tax consequences. You should always ensure you review your Binding Death Nominations (BDN) to ensure your beneficiaries are not subject to excess tax
Inadequate Provisions
As much as we want to, in Australia we do not have total control over our estates. Deliberately excluding dependents, although justified, may have a significant effect on the overall estate, as it is a requirement to make provisions for your dependents. Legal contests can be expensive and it is often faster and cheaper to ensure all potential beneficiaries are addressed as part of your estate plan.
The Public Trustee is for me
The Public Trustee often charges significant fees to administer your estate. While the fees may appear minimal compared to other options, the detail and level of service is very different to a financial advisor changing a fee for service. Advice : Proceed with caution. Compare products, outcomes, and service levels.
Elder Abuse / Fraud
The vulnerable in society, are easy targets for fraud and elder abuse. It is important to address this issue before it occurs by setting up a rigid system to protect your parents or loved ones, from falling victim to unscrupulous people.
To see our estate planning packages
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