What is estate planning?
Estate planning is simply:
- effectively preparing for your loss of mental capacity before you die by setting out:
- who is to manage your assets; and
- what is to happen with your personal care; and
- effectively preparing for what is to happen when you die, particularly with your wealth.
Why should you have an effective estate plan?
If you don’t have an effective estate plan and you lose your mental capacity, an application may need to be made to a Government tribunal for someone to be appointed to manage your financial and personal needs. Not only might someone be appointed that you would not want but they may not do what you want.
If you don’t have an effective estate plan when you die, not only might your assets not pass in the way you want but a valuable opportunity will be lost:
- for your beneficiaries to SAVE TAX on the income from investment of the gifts you make to them; and
- to PROTECT ASSETS against the various risks that need to be taken into account when passing wealth on death.
What are the key documents in an effective estate plan?
The key documents in an effective estate plan are:
- optional testamentary trust wills that will give beneficiaries an opportunity;
- to SAVE TAX on the income from the investment of the gifts made to them; and
- to PROTECT ASSETS against the various risks that need to be taken into account when passing wealth on death;
- enduring powers of attorney;
- enduring guardianship appointments;
How do you normally do an effective estate plan?
There are normally 5 stages in putting an effective estate plan in place.
Stage 1 – the fact find
This is where you tell your lawyer about you (and where relevant, your family) so that the lawyer can make sure that when you lose your capacity or die, your assets will be managed / pass in the way you want – this includes telling your lawyer what your assets and liabilities are and how they are owned, being:
- your personal assets – those held in your personal name or jointly with another party such as your home, shares, bank accounts, personal life insurances outside superannuation; and
- your non personal assets – those that you don’t own personally such as in a company, trust or super fund, including life insurances held inside superannuation.
Stage 2 – Your power of attorney and guardianship appointment
Stage 2 is potentially going to be more important to you much earlier than your will.
This is where you provide for what happens if you lose your mental capacity, by setting up an enduring power of attorney and guardianship appointment.
Stage 3 – What happens when you die, including with your assets?
In this stage, you tell your lawyer what you want in your will including what you want to happen with your assets when you die. At this stage, you don’t worry about the risks dealt with in stage 4.
Stage 4 – Shaping the estate plan and your will!
In stage 4, you tell your lawyer how to structure what you want to happen when you die. You will normally choose whether you want testamentary trusts and if so, whether you want asset protection measures included in them.
This stage is all about showing you how testamentary trusts and other protective measures can save tax and protect assets against the risks that need to be considered when passing wealth on death.
Stage 5 – Your housekeeping
You need to ensure that all of your assets [personal assets and non personal assets] and the entities that own the non personal assets are structured in a way that will permit your wealth to pass as you intend when you die. In this stage, your lawyer can tell you what needs to be done to make this happen.
Simply having a will doesn’t mean that your assets pass as you want and need them to. You still need to do your housekeeping, particularly if you want to maximise the tax saving and asset protection opportunities that can be provided to you with a well structured will.
Do You need assistance with your effective estate planning?
If you need any assistance with your effective estate planning, please get in touch with us so that we can show you how to do it, including the fact find with the minimum of fuss.
Disclaimer
The information in this article is general in nature and is not intended as legal advice. You should not do or fail to do anything in reliance on information in it. We do not accept any responsibility for any loss that you suffer if you do. You should seek professional advice before you do anything about the issues set out in this article.
