Estate planning will put into place a strategy for the whole of your estate and help you maximise your assets so that you can both enjoy them now and ensure that you provide for your beneficiaries in your Will.
Without the right advice you could inadvertently place a financial burden on your beneficiaries, rather than simply pass on the benefit of your assets.
Originally Estate planning was undertaken primarily to minimise the impact of death and Estate duties. Death duties were abolished in Queensland in 1976 and Federal Estate duties were abolished in 1979.
Estate Planning is now important for these reasons:
Tax
Taxation issues are one of the key reasons for Estate planning. The person that you appoint as your personal representative will be liable for your tax obligations in the period after your death and any tax on income arising as a consequence of the administration of your Estate.
One of the most important things to bear in mind in planning your Estate is any property which will be subject to capital gains tax. Assets that attract capital gains tax include land or buildings, shares, units in a unit trust, collectables and personal use assets.
Capital gains tax is not payable until the property is sold and it is important to avoid the need for assets which attract capital gains tax being sold unnecessarily. Capital gains tax is calculated differently depending on whether the property was acquired before or after 19 September 1985.
Asset Protection
Ensuring that both yours and your beneficiary’s assets are protected is also a key strategy in an effective Estate plan. Different strategies such as testamentary trusts can be considered to protect your assets.
Other issues you must consider are:
- If you have a family business
- If you want to make a charitable gift
- If you have family debts or capital losses
- If you have superannuation or life insurance: while the nomination of a beneficiary under an insurance policy or superannuation scheme is not testamentary like a Will, it can have taxation and other implications for the beneficiary and it is important to factor this into an effective Estate plan;
- If you have particular assets or family that you want to be given to specific people rather than being sold to pay the liabilities of the Estate; and
- If you have complicated family relationships, such as children from multiple marriages.
Flexibility
The most obvious way of distributing your Estate is to leave your assets through your Will.
However this is not the only option. Estate planning can allow you flexibility as to how you pass on your assets and interests.
You may want to limit the duration of an interest in property. For example if you want to ensure that certain assets will pass to your children after your spouse’s death. You may also want to attach conditions to a gift, for example by specifying that it be used for a certain purpose.
There are a number of different options for achieving these aims through your will or by having a family or testamentary trust.
We will talk through these considerations with you to ensure you have the best fit for your circumstances.
Family Provision Claims
Proper advice can minimise the risk of disputes arising over your Estate after death. Even if you have a valid Will it can be subject to challenge which is known as a Family Provision Claim.
The Succession Act 1981 allows a spouse, child or dependant (as defined by the legislation) to challenge a Will if they can show that adequate provision has not been made for their maintenance and support.
This is a complicated area of law and there are a number of factors a court will take into account when determining whether adequate provision has been made. This is why proper Estate planning is so important. There is also certain property to which a family provision order may not apply to.
The correct legal advice can help minimise the risk of a family provision claim and also minimise the strain of potential litigation on your loved ones.
Want to know more information about Wills and Estate Planning?
Contact our Wills & Estates team today to discuss your Wills & Estate Planning needs.