Estate Planning.. Not Just For The Wealthy!

Estate planning, or ‘life planning’ as we call it, isn’t just a tool for wealthy families.  Estate planning is useful for all of us, many of us accumulate a substantial estate reflecting a lifetime commitment to work.  It is our interest and our family’s that we don’t waste unnecessary money on tax or expose your hard-earned assets to potential risks and otherwise accommodate families to future conflicts and disputes.

Life planning covers your future estate, assets, and tax planning.  Generally, the easiest place to start is with your Will.  Your will is central to your estate plan, and there are mechanisms which can be included in your will to ensure that your family are all adequately provided for.

You can choose a simple Will or a testamentary discretionary trust, which is a special type of discretionary trust that is created by a person’s Will.  The Trust comes into existence after the will-maker dies.  Instead of passing the assets directly to the beneficiary, the executor transfers the assets into a discretionary trust to be held by a separate trustee for the benefit of the beneficiary (and a general class of beneficiaries).

There are a number of benefits that come with the creation of a testamentary discretionary trust, some of which include:

1. TAX PLANNING

An advantage of a testamentary discretionary trust is that the trustee of the trust can stream the income earned from the trust assets through to a class of beneficiaries in the most tax-effective way.  This usually includes immediate family members such as children.

2. ASSET PROTECTION

When a testamentary discretionary trust holds assets, your beneficiaries are protected from being at risk of personal liability such as from creditor claims, the application of bankruptcy or family law claims.  This is because the trustee has legal ownership and uses their discretion to distribute any income or capital to the beneficiaries and until they receive that share, they do not own the asset.

3. PROTECTION OF GOVERNMENT ENTITLEMENTS

Finally, if your beneficiary is receiving Centrelink entitlements now or in the future, trust structures can be used to preserve those entitlements, reflecting separate ownership.

All estate planning solutions need to be tailored to your personal circumstances.  For personalised estate planning advice and to organise an initial meeting with one of our legal team, please contact us.

 

Kayla Kennedy – Solicitor

LLB

Spring Clean Your Life Planning

Spring has sprung, the days are getting longer and the sun is getting warmer – if you haven’t already, you are likely getting out in the garden, cleaning the house, and planning your summer projects around your home and garden.

In all the excitement of improving your physical environment, spare a thought for your life planning; that is, your future estate, asset and tax planning – it is a great time of year to give these a freshen up too!

Your Will is an easy place to start.  We recommend that a review of your existing Wills should be undertaken every 5 years, or earlier, if your current circumstances change.  If you don’t have a Will, NOW is the perfect time to get that process started.

Aside from regular reviews, there are certain milestones which are ideal point to consider and update your Will.  If any of the following have occurred in the last 12 months, or are likely to occur in the next 12 months, a review is necessary:

  • ENTERING A NEW RELATIONSHIP
  • MARRIAGE
  • CHILDREN
  • PURCHASING OR SELLING PROPERTY
  • CHILDREN BECOMING ADULTS
  • RETIREMENT
  • ESTABLISHING A BUSINESS
  • BUSINESS OR TRUST CHANGES
  • RELATIONSHIP BREAKDOWN, SUCH AS SEPARATION OR DIVORCE

If any of the above scenarios have recently changed in your life, it would be a good idea to grab copies of your signed Will, have a sit down and read over what you have in place.  If you see anything which requires change, or you are unsure about the impact of a life event, come see our legal team and we will assist you with the review.

Another issue worth noting is how marriage, separation and divorce can affect your Will if you fail to update it.  Each has a different consequence, and failing to consider and update your Will and Powers of Attorney at the time can result in the wrong people being in control of, and entitled to, your hard-earned assets.

The key to good long-term life planning is to be prepared, and obtain advice before committing to a significant life, asset or business change [where possible].  This isn’t limited to Wills, as changes can also impact Powers of Attorney, ownership of assets [ie. if owned jointly with others], business structures and agreements and superannuation entitlements.

Contact our Legal Team today to get your Life Planning spring clean underway.

 

Kayla Kennedy – Solicitor

LLB

What To Consider When Making Specific Gifts in Your Will

What to consider when making specific gifts in your Will

When preparing your Will there are a number of things to consider such as who to appoint as your Executor, the beneficiaries of your estate and whether you wish to leave any specific gifts to a particular family member or friend.

A ‘gift’ can be anything from a particular item of jewellery to a sum of money.  Below it will be discussed the matters that should be considered if you want to leave a gift under your Will.

Firstly, you cannot gift an item if you do not own them.  This situation can arise where a property is held under a Self-Managed Superannuation Fund or under a Trust.  Another situation to mention is when an item is owned jointly with another person.  In this case, the surviving owner will obtain the asset upon your passing.  Consequently, if you gift an item that you do not own, or is jointly owned, will be ineffective under your Will.

Secondly, it is important to update your Will to ensure that if the asset you have gifted still exists when you pass away.  We understand that life happens and that items and assets are sold or given away during your lifetime.  Therefore it is important to update your Will if you know that you no longer hold an asset.  However, if you have made a gift that is no longer in your possession, the direction in your Will would be ineffective and result in the recipient not receiving the gift.

Finally, if you wish to gift a particular asset or item under your Will, it is important to consider these items are properly described.  It is recommended to provide adequate detail when describing your asset to ensure your wishes are consistent as under your Will.

If you wish to discuss your Will, please do not hesitate to contact our friendly Canny Legal team.

 

Kayla Kennedy

Law Clerk