Your final wishes

A Will isn’t necessarily enough to make sure your assets are passed on the way you want them to be. But a good family succession plan is.

Family succession planning is a way of ensuring your assets are passed onto your loved ones in the most efficient and tax-effective manner possible.

A good family succession plan lets you decide how to pass on your assets while helping to avoid family disagreements over who gets what.

There is a lot to consider including the preparation of a Will, appointing a power of attorney, and setting up a testamentary trust – so it’s a good idea to get some professional help!

The Will

A Will is the foundation of good family succession planning. It says when, where and how you would like your assets distributed.

The idea is for you to decide how your assets are to be divided and to help avoid any disputes over who gets what. A Will is a legal document signed by you (often called the testator or testatrix) and two witnesses – who are not beneficiaries.

An important consideration for the Will is to contain a short explanation of your decisions. This may reduce the potential for a legal dispute once the Will is read. It can also be a good idea to discuss these things with your loved ones so they understand the reasoning behind your choices.

A financial adviser can help structure a Will and discuss the relevant financial implications, as well as assess the changing value of the assets contained in the Will. Your Will should be reviewed any time your circumstances change.

Wills and Trusts

Unfortunately, having a Will may not be enough to ensure your assets are passed on the way you want them to be.

A Will generally only deals with the distribution of assets personally owned by you.

Determining the ownership of assets is crucial. You may assume that you own an asset when in fact you own it jointly, or it is owned by a structure such as a company, super fund or other trust.

Joint assets not included in the Will automatically fall to the surviving owner.

Including a trust as part of your Will is becoming an increasingly popular option. The advantages include maintaining social security entitlements, ensuring assets pass to children even if a surviving husband/wife remarries as well as capital gains tax and income tax advantages.

A testamentary trust can also help provide for children with an intellectual disability or mental illness, and can protect assets when a beneficiary becomes bankrupt or divorced.

The need for, or effectiveness of, a trust may depend on what assets are available and what instructions are left in the Will.

A good financial adviser can help you navigate the complexities and give you the options available based on your circumstances.

Your insurance and superannuation benefits

Life insurance and superannuation are generally not covered by a Will.

Many super funds have tight restrictions on who can be a beneficiary. It is important that you are aware of these restrictions when planning your estate, otherwise the person you wish to receive your super may not be eligible to receive it directly from the fund.

Super benefits are taxed differently depending on who they are paid to.

It may be a good idea to leave your super to a particular beneficiary and non-super assets to another.

Leaving assets to loved ones – not the tax man

It’s important to consider tax implications so the tax man doesn’t end up being your biggest beneficiary. A good family succession plan will provide ongoing minimisation of income tax for your beneficiaries, allowing the opportunity for deferral of tax liabilities, including Capital Gains Tax (CGT).

Understanding whether an asset should be passed into a trust or sold by the end beneficiary can prove valuable from an income tax and CGT perspective.

Capital Gains Tax, which applies to many assets, can have a substantial impact when a beneficiary sells an asset received from the deceased’s estate. If not considered carefully, beneficiaries may not be treated fairly.

Flexibility of distribution from a testamentary trust allows the taxable income of the estate to be managed more effectively.

Cover all bases

A poorly planned estate can result from circumstances such as:

  • a plan not reflecting the circumstances of the beneficiaries, such as the need for asset protection and tax effectiveness
  • lack of thought on ownership and the structures under which assets are owned
  • not considering debts
  • a lack of thought about the tax consequences of certain decisions.

Family succession planning is a very important part of everyone’s financial future. To check you have all bases covered, contact <adviser> of <office> on <phone> with your estate planning questions concerns. While it all sounds very daunting, we can help smooth the process for you.




*Kellie Payne of Kellie Payne Financial Solutions is an Authorised Representative of Guidance Group Pty Ltd ABN 20 653 283 955 AFSL 534999.

This article does not consider your personal circumstances and is general advice only. You should not act on any recommendation without considering your personal needs, circumstances and objectives. The information in this editorial is not tax advice and you should refer to your tax specialist with any questions. We recommend you obtain professional financial advice specific to your circumstances.

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