While no one likes to dwell on their mortality, estate planning is essential to help protect your assets and loved ones. It is also a critical step in planning for the unforeseen. The process usually involves determining your values and needs, communicating with loved ones, assessing your circumstances, and working with professionals to create a plan that reflects your objectives.
We take a holistic view when helping clients plan their futures and can work with our strategic partners or our client’s preferred specialist to help facilitate wealth management and asset protection. It’s not just about making a Will but looking at the broader picture and implementing strategies to achieve optimal outcomes.
As things change, your estate plan may need to be reviewed and adjusted, and our team can work with you to ensure it continues to reflect the best outcome possible in your circumstances.
The importance of making a Will
A Will performs various functions. Primarily, it sets out how your property and assets (estate) should be distributed when you die, and appoints a trusted person/s to manage your affairs (your executor/s). Wills can also provide directions about the guardianship of minor children and your preferences regarding funeral arrangements.
A valid Will must meet certain formal requirements. It must be signed, dated and properly witnessed by at least two people who are not beneficiaries of the Will. The Will itself should be carefully preserved, as any marks or damage can lead to questions about its legitimacy. Even a staple mark can bring the validity of the Will into question, as it may suggest that there was a document attached that is missing.
When someone dies without a valid Will, they die ‘intestate’ and letters of administration are usually required before the estate can be administered. This requires making an application (usually by the next of kin) with supporting evidence to the Supreme Court.
Critically, if you die intestate you don’t have a final say in who inherits your estate. Rather, your assets are distributed according to a formula set by legislation in the relevant jurisdiction. Essentially, the rules provide for a specific order of distribution to the deceased person’s next of kin, depending on each situation. These rules can be complex, depending on the circumstances of the deceased, and lead to bitter and unnecessary disputes between family members and other loved ones.
Do I need a testamentary trust?
A testamentary discretionary trust is a trust made under a Will that comes into effect after a testator dies. The trust can help protect minor or vulnerable beneficiaries by appointing a trustee to manage the trust under the terms of the trust deed. This enables capital and income from the trust to be distributed to the beneficiaries flexibly, and as needed. In some cases, trusts can also help manage tax liabilities, and you can discuss these matters with your lawyer and accountant.
A testamentary trust may not be the right tool for everyone – the administration of a trust attracts ongoing fees for each year it operates, for example, annual tax and auditing costs, and trustee’s professional fees, if relevant. We can help you decide whether a testamentary trust is right for your circumstances.
Business succession planning
A business succession plan stipulates who takes over a business when an owner leaves, whether by choice or circumstance. The purpose is to minimise disruption to the business with a smooth transition of power. Planning often involves all family members/stakeholders and takes account of the provisions for the retiring partner as well as the plans, aptitudes and existing assets of younger generations.
It is important to consider the financial implications of succession planning, including retirement income and business transfer expenses. A succession plan often contains a current business valuation and may focus on maximising the value of the business just prior to the owner’s exit (especially if the business will be sold). Careful organisation can help manage capital gains tax, stamp duty and income tax for the business owner, their family and business partners.
Each business is unique and so too should be the strategy for succession. We can work with clients and other professionals to create a structured plan to provide much-needed guidance for a business owner’s planned retirement or in case of an unforeseen event.
If you need assistance contact [email protected] or call 07 5657 8919.