Monday, November 20, 2017

Estate Planning

Estate planning involves making a plan to distribute certain assets to certain people in the event of your death. A complete estate plan will allow you to retain greater control over your assets and will also cover issues such as determining who can make decisions on your behalf should you become unable to in the future e.g. Power of Attorney arrangements. It is crucial to talk to your professional advisors in order to ensure that any plan is documented, reflects your wishes, and is in the best interests of you and your family.

Do you need an Estate Plan?

The need for an Estate Plan is more prevalent when: 

  • you have sizeable assets 
  • you have very strong feelings about how you want your assets distributed 
  • the personal circumstances of your beneficiaries require the creation of more complex trusts within your will e.g. second marriages, blended families, children with a gambling problem.
  • you have vulnerable beneficiaries with special needs e.g. children with a disability or medical conditions requiring treatment.
  • your investment or business structures are complex and may include a family trust, a self managed superannuation fund or a private company.
  • you wish to minimise the tax liability of your estate or your beneficiaries, for example via superannuation or testamentary trusts.

You have worked very hard to accumulate the assets you have, often going without so that your farm or business can survive and prosper. Estate Planning is about protecting the wealth you have created and making provisions to control the distribution of that wealth. It’s also about making sure that your children and grandchildren get the benefit of that wealth – without having to pay a big chunk of it to the ATO, or to lawyers. The most compelling reason however to prepare an Estate Plan is that it acts as a vital communication to your family in that it clearly communicates your wishes and the reasons behind those wishes. As advisers it is always sad to see a family torn apart and feuding over money, expectations not met and a lack of communication. Being upfront, having a thorough plan and communicating this to your family can save your family from all that heartache.

The process of preparing an Estate Plan at Auswild & Broad involves:

Step 1 – We prepare an Engagement Letter detailing the work to be done with an estimated fee structure. With this letter you will receive some basic information about Estate Planning, along with a set of questionnaires for you and your family to complete. 

Step 2 –We meet with you and your family to discuss your needs and complete a fact finding exercise where we compile a Family Tree, a Business Structure Flowchart and a Statement of Financial Position. We also review and discuss the answers to your family questionnaires.

Step 3 – We identify any issues that may arise including review of tax, CGT, asset protection and Centrelink implications. In addition we look at protecting/preserving the family unit an whether the plan is fair, easy to understand and likely to be challenged. From here we make a recommendation or identify a series of options for your consideration. 

Step 4 – We meet with you again to go over our recommendations and prepare an Action Plan. In most cases we will liase with your solicitor, banker, financial planner and any other advisers to ensure that your plans are compatible across these disciplines.

Step 5 – You receive a complete package containing a summary if your Estate Plan, detailed notes and tax considerations, notes from advisers, a copy of your wills along with the Family Tree, Business Structure and Statement of Financial Position prepared earlier. 

Comment

“Quite often I hear clients say that they can’t afford to prepare an Estate Plan. It’s a valid point, a thorough Estate Plan could cost around $5000 or more depending on the complexity. However too often we see the results of not having a well thought out plan – kids having huge capital gains on shares they inherited, sons inheriting the farm along with the $2 million mortgage on it, inequities among siblings that cause long term family rifts and surviving spouses reliant on meagre government pensions because there was not enough assets/income left to support their retirement. In my experience, where there is no plan the cost of additional taxes, lost Centrelink benefits and accountancy/legal fees incurred to remedy ineffective structures is far in excess of $5000. Just a little food for thought….” Peter George (2011)


Auswild & Broad Pty Ltd
ABN: 88 089 746 190
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E. temora@auswildbroad.com.au
P. (02) 6978 0077
 
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