Save tax with good estate planning

November 10, 2019

The importance of good estate planning

Careful planning for the distribution of your estate involves protecting the assets you have worked hard to acquire and ensuring their safe and smooth transfer to your loved ones.

Unfortunately, documenting what should happen when you’re no longer here is something most people don’t like to think about. However, in its simplest form, it’s really just about ensuring peace of mind for both you and those you care about.

Estate planning is an important part of life – especially if you have a variety of assets in your own name, companies, trusts and/or a superfund. It’s about making sure that the investments you have and make now are passed on to your family or beneficiaries in the most effective way.

With family units becoming more complex, estate planning is more important than ever before and often involves more than a simple will. It can be quite a complicated area. Here are eight issues you may want to consider.

Eight key things an estate plan should do

An effective estate plan should:

1. Give you certainty and peace of mind as to how your assets will be managed if you are incapacitated and unable to look after your own affairs.
2. Establish how and when it’s best to distribute assets to your loved ones.
3. Cater for the current and future needs of all your beneficiaries.
4. Protect your assets so that they pass to the right beneficiaries at the right time.
5. Allow your beneficiaries to legally reduce capital gains liabilities on assets and reduce or eliminate tax on income generated from their inheritance.
6. Protect your beneficiaries’ inheritance in the event of divorce or bankruptcy.
7. Guard against undue waste and extravagance due to spendthrift tendencies, age, mental health problems, drug addictions, gambling or other vulnerabilities of a beneficiary.
8. Distribute your assets to your intended beneficiaries, not to an in-law or former spouse.

A checklist for starting an estate plan

As noted above, estate plans can involve much more than just a will. To make things as simple as possible for your family, friends, and business associates, it’s a good idea to do the following:

1. Start by putting together a list of physical items of value in your home and who should receive them. For instance, do you have jewellery, collectibles, art, vehicles or family heirlooms that you want to go to particular people? What about the home itself?
2. Next, put together an up-to-date list of assets such as stocks, bonds, bank accounts, SMSFs and insurance policies. Is the beneficiary information for each one clearly outlined? Do you have a record of account numbers and where each one is held?
3. If you have any debts – such as a mortgage, credit cards, car loans, etc. – make a list of these and include information about who holds the debt and the amount owed.
4. If you own a business, make sure you have a clear succession plan in place that outlines who will be responsible for what, how assets should be transferred or distributed, if and how the business should be sold, etc.

How we can help with your estate plan

Because of the complexities of estate planning, it’s a good idea to sit down with a professional to ensure things are well prepared in advance. Collecting all the information outlined above can be a challenge, but Oreon Partners has helped many clients collate all the necessary information to create a clear, unambiguous will, together with listing and storing important documents (eg. land titles, share certificates, superannuation details, etc).  This makes it much easier for your executor to carry out their duties when the time comes.

Our team of advisers can work in tandem with our estate planning lawyers to tailor a plan that achieves your desired distribution of wealth in the most tax-effective way to avoid burdening your loved ones with unnecessary taxes or disputed inheritances when you pass away.

Finally, remember that estate planning is an important part of your overall financial plan and is something that shouldn’t be left to the last minute. After all, we never know when that last minute will be!

If you’d like some help with estate planning please get in touch.