Estate Planning

Estate planning is all about giving you proper control of your assets, making sure that the right amount of money and assets go to the right person(s) at the right time. It is about wealth succession.  Estate planning is complex and requires the expertise offered by a solicitor and accountant in conjunction with the guidance of a financial planner.

Wills

It is important to ensure that you do not die intestate (i.e. without leaving a valid will) or with a will that does not meet your current situation or satisfy your current estate requirements. It is vital to maintain a register of estate information such as the location of your will, house deeds and investment certificates and documents.  It should also include a list of all your separate investments and specific bequests, and be kept in an appropriately safe position where the executor can easily gain possession.

A properly executed will ensures that after your death:

• Assets will be invested or distributed according to your wishes.  This is the function of the executor/s.  You should choose an executor who is unlikely to pre-decease you, who is readily available and if possible, is someone in tune with your wishes.  It is quite common to have more than one executor appointed.
• Funds are held in trust for beneficiaries.  It is possible some funds may be held for some time in trust for beneficiaries who have not yet reached the age you nominate for them to receive the bequest.
• Taxation can be reduced wherever possible.  This is another consideration to bear in mind when you are endeavouring to ensure that your desired degree of equity amongst beneficiaries is achieved. Depending on the timing of an estate settlement, and the taxation situation of individual beneficiaries, CGT can have a substantial impact on those who receive and later sell assets from a deceased estate.

Powers of Attorney

A Power of Attorney is a formal legal document in which an individual (the Donor) appoints another individual, individuals or a company (the Attorney) to act on their behalf. A Power of Attorney is sometimes referred to as a ‘Living Will’ as it gives the Attorney complete authority to act on the donor’s behalf in any business decision or transaction that the Donor would normally undertake themselves.

Powers of Attorney have extremely broad scope and careful consideration should be given to which individual, individuals or company is chosen to act as the Attorney. The Attorney can effectively make legal, financial and personal decisions on an individual’s behalf and as such a significant level of trust and comfort is required by the Donor in making the appointment.

There are generally three types of Powers of Attorney depending on the State or Territory law prevailing:

• General Power of Attorney

Normally used in a limited capacity.  For example the donor may wish the Attorney to conduct a specific transaction such as the purchase of a property or the donor may be going overseas for a prolonged period and wishes the Attorney to mange their affairs in their absence. However if the Donor becomes mentally incapable of managing their own affairs the General Power of Attorney becomes null and void.

• Enduring Power of Attorney

An Enduring Power of Attorney continues to have force and effect even if the Donor loses mental capacity. This means that should the donor lose their capacity due to accident, stroke or a degenerative disease, the Attorney can step in and manage the Donor’s affairs on their behalf.

• Enduring Power of Attorney – Medical Treatment

This type allows the Donor to authorise an Attorney to make decisions regarding medical treatment. Typically it is prepared where the Donor wants to express a preference in relation to the administration of a particular medical treatment, for example no blood transfusions or DNR instructions (do not resuscitate).

Testamentary Trusts

The term trust describes the situation where a trustee looks after the assets on behalf of the beneficiaries. The trustee may be one of the beneficiaries but in many cases it may be a professional advisor like an accountant or solicitor. Testamentary simply means that the trust has been established as a consequence of a will. They can be an effective tool to make distributions to beneficiaries. They can be as simple as leaving a set amount of money to a member of the immediate family or to a charitable organisation or as complex as appointing a guardian as well as primary and secondary beneficiaries. Discretionary trusts enable beneficiaries to enjoy assets and receive income payments without actually owning the assets. This lack of ownership can have particular benefits in relation to; bankruptcy, pension entitlements, family law proceedings and income splitting.