Estate Planning Needs

As accountants, business and taxation advisors our role covers many aspects of our clients’ financial affairs.

One important matter that often gets overlooked by clients caught up in the everyday running of their businesses and personal affairs is what would happen if they were to pass away.  Would their family be well looked after? Where would their assets go?  Would the Assets go where they want them to go?

To this end we are regularly encouraging our clients to implement and subsequently review their Estate Planning.

When you think Estate Planning do not just think of your Will.  Sure, Estate Planning does involve looking at your Will as it will be an important document that forms part of an overall plan, but that is just one part of the planning. Estate Planning also involves having a clear understanding of what assets you have under your control, directly or indirectly. For example, did you know that your superannuation is held in a special trust governed by its own rules?

Estate Planning is best achieved by using the skills of a number of professionals: your Accountant and Taxation Advisor; Financial Planner; and always utilising the services of a Lawyer with expertise in drafting Wills, Power of Attorneys, Guardianships and, if necessary, Binding Nominations.

One of the first steps in this process is to understand:

• what assets you own in your name that are willable assets;
• what assets you own jointly, and whether they are as tenants in common or Joint tenancy; and
• what other structures you have, and who owns/control them – whether they be companies, trusts, partnerships, superannuation funds.

All too common we see Wills written to leave assets to family members where the assets are not actually owned by the individual but are owned by another structure. For example, you may have an asset in a family trust, say some Listed Australian Shares, that you wish to leave to a family member. As that asset is not directly owned by you it is not a willable asset. If you control the Trust by being a Trustee and/or appointor, then you need to have a plan to transfer control of that Trust to the family member you wish to leave the shares to.

Similarly, if you have a company which owns assets, those assets are not willable assets. However the shares that you own in the company are willable assets and therefore you need to look at dealing with the shares in that company rather than the asset owned by the company.

Often overlooked in an Estate Plan are your liabilities. How are they to be dealt with? Do we need to put some Insurance in place to meet these?

You may also have transferred assets already to family members. Do we need to take these transfers into account when distributing the remaining assets? Do we need to consider asset protection for your beneficiaries (eg beneficiaries who are minors, or in an unstable relationship)? What are the taxation consequences when assets are distributed?

Once the above issues are identified we can then determine the objectives of the Estate Plan. With any plan, starting the process early coupled with clear communication amongst family members will give your plan the best basis for success.

It also can be quite useful to have a memorandum with your Will explaining the reasons behind various decisions that are contained in the Will, and how other structures and documents (eg Binding Nominations) interact with your Will.

You should also be aware that any changes to your personal circumstances can affect your Will and could make it invalid.  Examples could be getting married, a separation or divorce, having additional children, your children getting married, separation amongst children who have had long term de-facto partners.

As Accountants, we are in a good position to lead you through a process and assist you in engaging the right professionals to produce an Estate Plan that best meets your needs.

Stuart Clutterbuck
Partner