For the last ten years I have been travelling regularly to regional Western Australia where I help families with their estate and succession planning requirements. What is interesting is how quickly circumstances can change necessitating an alteration to estate and succession plans.
When estate plans are prepared you allow for a certain number of probable scenarios. However, due to the complexity of each component they require regular review. In the past 12 months estate plans have been updated for the following reasons:
Where a client’s partner dies, they are always very thankful to have the deceased affairs in order allowing for a smooth transition of assets from one partner to the other. A death however, usually requires a wholesale review of an estate plan and it’s objectives. If only one parent now remains, thoughts often turn to considerations such as gifting assets to children, planning to minimise taxes on superannuation death benefits and succession planning.
Your will is automatically revoked when you are divorced. Therefore planning has to be undertaken immediately you decide to separate from your partner. Changes required include preparing a new will and changing superannuation beneficiary nominations. You should not wait until you are divorced to instigate these changes. Also, you may wish to undertake a review of your insurance requirements to make sure your children are provided for in the event that you have a serious accident or illness.
3. Children getting older
Whilst your children are young and still at school, estate planning for them involves making sure you have enough assets to provide for their education and that the funds are held securely in a tax and asset protective manner. As your children get older, strategies must consider their own developing family relationships, the independence they require and how your estate plan can be modified to cater for these changes.
4. Children joining the family business
In a typical farming situation, one or two children may decide that they wish to carry on the family tradition of farming. This announcement usually requires estate plans to be completely overhauled. Where once all assets were to be distributed equally between all children, a revision might include leaving farming assets to the farming children and non farming assets to the non farming children. Equalisation measures are usually required to provide fairness and insurance is frequently used. A renewed focus is also applied to long-term succession planning at this stage.
5. New business
Where a new business or farm is purchased, consideration needs to be given to which entity, person or persons should own the business or farm. Also how it will be financed and ultimately how it fits within the overall estate plan. All these factors must be considered before purchasing the business or it could be costly to change ownership at a later stage.
Your superannuation death benefits are tax free when paid to your dependants. However, once your children are over the age of 18 and are no longer your financial dependants, superannuation death benefits may be taxable upon payment. New strategies are required to minimise the tax if your superannuation death benefits are paid to financially independent children.
7. Moving to a retirement home or aged care facility
Planning for aged care and the later years of your life frequently requires adjustment and consideration of your estate plan. Family agreement and consensus is required to maximise your position and consider the best strategies for your family.
8. Succession Planning
A decision to hand over control of the family business to a child requires planning and an update of estate planning documents. These should all be executed at the same time and communicated with all family members, so that transparency, family harmony and unity is maintained.
9. Buy Sell Agreements
A Buy Sell Agreement is an essential when you own a business with another independent party. Recent changes in legislation involving the taxation treatment of insurance policies held for the purposes of a buy sell agreement, require a review of all buy sell agreements to make sure that your equity in your businesses is preserved for your family.
There are many components in an estate plan and they are constantly changing. Your estate plan is the foundation upon which complex decisions are made, and therefore regular review is vital to keep it up to date.
A regular review of your estate plan will assist you in:
- Maintaining family unity;
- Communicating your family story to the next generation;
- Transferring family wealth and family values;
- Avoiding costly estate planning disputes;
- Proactively managing estate planning taxes; and
- Protecting your equity in business partnerships
Estate planning is not a set and forget process. To give you the best possible chance of achieving your estate planning objectives, treat estate planning as a journey and not a destination.
Follow My Footprints – Geoff
- Estate Planning For Life
- Carpe Diem – “Sieze the Day”
- Live Your Legacy
- My Passion
- Estate Planning for Superannuation Benefits
Disclaimers & Disclosures
Geoff Ivanac is a Sub-Authorised Representative (No. 000309751) of Barsden Private Wealth Pty Ltd ATF The BPW Trust (ABN 41 153 930 799) trading as Barsden Private Wealth. Barsden Private Wealth is a Corporate Authorised Representative No.416315 of BPW Licensee Services Pty Ltd (AFSL 484 198).
The information provided on this website has been provided as general advice only. We have not taken into account any particular person's objectives, financial situation or needs. You should, before acting on this information, consider the appropriateness of this information having regard to your personal objectives, financial situation or needs. We recommend you obtain financial advice specific to your situation before making any financial investment or insurance decision.