Nov 19, 2018 / News

Financial Planning

Top 5 estate planning considerations

Usually attributed to Benjamin Franklin, his abridged “nothing can be said to be certain, except death and taxes” is particularly relevant when delving into the world of estate planning. In this article, I draw attention to five key items every estate planning strategy should address. Furthermore, I offer questions for consideration and stress the importance of timely advice. In estate planning, a stitch in time saves nine. Keep that in mind.    

1. Review your Will
2. Review your enduring Power of Attorney
3. Review your business structure 
4. Review your trust deeds
5. Review your superannuation funds

Review your Will

One minute you’re single and carefree the next, you’re married with a beautiful young family. The danger becomes illness, accident and losing testamentary capacity to make a legal and valid Will. We’ve all seen the barrage of life insurance ads on tv repeating ad nauseam “protect what’s important to us” but in truth, it’s a fair and valid point because in an instant, life changes. 

You’ve taken advice, made prudent investments and accumulated wealth. Are you one of the estimated 50% of adult Australians without a valid Will or have you enacted an estate planning strategy that safeguards and reflects your current wishes? If so, you should be aware a Will only deals with assets you own not assets you control through vehicles such trusts or companies.

Periodically review your Will and ensure the document reflects your current wishes.

Review your Enduring Power of Attorney

Enduring Power of Attorney should be treated with the utmost respect as it conveys upon a nominated individual significant legal power. In the event you lose capacity to make your own decisions, the document grants legal authority to the named individual to manage your affairs. That alone should stress the importance of appointing a trustworthy attorney.

Alzheimer’s Australia research suggests a “considerable proportion of financial abuse of people with dementia is perpetrated by people appointed as an attorney under an Enduring Power of Attorney not acting in the interests of the person with dementia.” It would be wise to ask yourself the following questions: “Do I trust my attorney?” and “Is my choice of attorney appropriate?”

When considering estate planning, it’s worth noting an Enduring Power of Attorney is effective for purposes of land transfer and property law. Given the document bestows legal authority on your attorney, an Enduring Power of Attorney must be registered with Landgate. Ensure it is.

Review your business structure

Anticipated growth, asset protection, future sale prospects, industry of operation and tax effectiveness only scratch the surface when considering business structures. Perhaps greatest of all is exposure. Under this business structure, what is my exposure? It may seem overly negative but it’s an important question, one that could save you everything.

Further items for consideration include the provision of Division 7A, capital gains tax applicable to future sale, machinations of Buy/Sell Agreements, the nature of loans made to the structure (secured or non-secured), directors in place (for asset protection purposes) and the configuration of the company’s shareholders.

Review your trust deeds

Regularly subjected to legal challenges and bureaucratic rules tinkering, the world of trusts is colourful and complex. That introduction should articulate the importance of a trust deed. A trust deed is a document that initiates and sets the rules governing a trust. When considering Trusts and Wills, the roles of Appointor and Guardian carry considerable weight. Don’t leave either subject to legal challenges, put formal succession plans in place.

Further points of interest include establishing if loan accounts owing to beneficiaries who have received benefits from the trust exist, determining if annual trust distributions have been made to eligible beneficiaries and whether or not an appropriate Family Trust Election has been made.

Trusts are effective tools but ensure you’re across all their estate planning details.

Review your superannuation funds

Every election cycle, superannuation dominates the airwaves and policy discussion. No industry or estate planning strategy is left untouched by the subject and for good reason. It’s an incentive to accumulate wealth and plan for retirement. If only for rules changes, super is not a ‘set and forget’ element, it’s a ‘constantly review and update’ item.

In the event of your death, have you considered who will receive your superannuation and how they will receive it? Have you put a Binding Death Benefit Nomination in place, does your fund include a policy of life insurance and are you aware of the tax liability upon passing? These questions only but scratch the superannuation planning surface.

How can Edwards Marshall Financial Solutions help you?

Are you interested in finding out how much you know about Estate Planning? Click here to take our quiz.

We can conduct a detailed review of your estate planning arrangements. We welcome your call on 08 8139 1111 to arrange an obligation free meeting to discuss.

About us

EMFS was formed in 2001 originally to service the financial planning needs of the clients of Nexia Edwards Marshall, Chartered Accountants. In addition, we now service clients referred by other accounting firms, lawyers and clients who are not serviced by Nexia Edwards Marshall. We manage funds totalling about $250m on behalf of clients.

Sources:

• Kollmorgen, A., Money and family can be a volatile mix

• The Public Trustee, Department of Justice, Enduring Power of Attorney.

Liability limited by a scheme approved under Professional Standards Legislation. Contents of this publication are general of nature and are not intended to be used for decision making purposes. Edwards Marshall Financial Solutions Pty Ltd ABN 45 096 434 842 is an Authorised Representative of Edwards Marshall Advisory Pty Ltd ABN 18 600 878 555. AFS Licence No. 479 792.