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“Simply put, Estate Planning is the series of strategies you personally implement to ensure your assets are distributed to the right people according to your wishes when you pass away.”

Estate Planning

What is Estate Planning?

Simply put, Estate Planning is the series of strategies you personally implement to ensure your assets are distributed to the right people according to your wishes when you pass away.

Planning to pass your wealth on to the next generation is best done early, ideally at the beginning of your wealth creation process.

Is it all about preparing a Will?

Having a valid Will is certainly an essential component and absolutely should be a top priority. 

However, holistic Estate Planning is far more than that.  Many assets that you control will not even form part of your estate.  With that in mind, a good estate plan will:

  • Ensure that ownership and control of your assets passes to the intended beneficiaries in the correct proportions,
  • Utilize smart tax planning strategies to minimize income and capital gains tax, 
  • Protects those assets should a beneficiary be involved in any legal difficulties e.g. bankruptcy or a divorce, and
  • Ensure that your loved ones are well looked after and your affairs are settled according to your wishes, should anything happen to you.

Issues that we believe you should consider when preparing your Will, and other areas within Estate Planning, are mentioned below. 

Will – It is important to regularly review your Will (at least every three years) to ensure that it continues to reflect your wishes.

Living Will (Advance Care Directive, Advance Health Directive) – If you face a situation where you are no longer able to express your own wishes regarding medical treatment and care, having a Living Will in place can give you and your loved ones peace of mind knowing that your choices are honoured. 

Enduring Powers of Attorney – Consider nominating someone you trust to make financial and/or legal decisions on your behalf, even if you become mentally incapacitated. 

Binding Death Benefit Nominations – This type of nomination is binding on the trustee of the superannuation fund so long as it is valid at the date of a person’s death and can give you more confidence that the right person will receive your benefit if the unthinkable happens.  

Did you know?

  • This type of nomination expires after three years within a super fund. Something as simple as this could have a major impact on your Estate Plan.
  • There may be considerable tax payable when passing on superannuation money to someone who isn’t your dependant.

Testamentary Trusts – Making provision for a testamentary trust within your Will allows an inheritance to be paid to a group of people instead of just one person directly. Someone is nominated as trustee to manage the trust and the potential beneficiaries are also nominated. This separation of control and benefits may provide taxation advantages, as well as protect assets from legal action involving a beneficiary and/or from being misused by a beneficiary.

 

Where to start?

  • Identify the important people in your life.
  • Determine their financial needs after you have passed away.
  • For business owners, think about your end game and how you will pass on the value you have built up in your business. 
  • Review your current Estate Planning arrangements.
  • If you don’t have these key strategies in place, prioritise getting this resolved. If you would like to speak with someone within our network, we can arrange that for you.  
  • Consider tax implications that could arise from your Estate Planning arrangements.
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“An effective way to structure asset protection and to ensure tax efficient income streaming, with the goal of protecting intergenerational wealth transfer or forming part of an entrepreneur’s business exit plan.”

Trusts

A trust is a legal arrangement where one party, known as the trustee, holds and manages assets for the benefit of another party, called the beneficiaries. Trusts are commonly used for various purposes, including investment, estate planning, and business operations.

They can be an effective way to structure asset protection and to ensure tax efficient income streaming, with the goal of protecting intergenerational wealth transfer or forming part of an entrepreneur’s business exit plan.   

Our professionals most commonly work with discretionary trusts, as well as unit trusts depending on the circumstances, and are arranged in consultation with your accountant. Reach out to our team to explore whether any of these could work for you.

How are trusts taxed in Australia?

Trusts are treated as separate entities for tax purposes. The trustee is responsible for managing the trust’s tax affairs, including lodging tax returns and paying any tax liabilities. Generally, the beneficiaries are taxed on their share of the trust’s net income, regardless of whether the income is distributed to them.

Trusts offer flexibility and can be tailored to meet specific needs, making them a popular choice for managing and protecting assets.

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“A documented plan that includes providing for structured transition of ownership to the remaining business partners or family members. It also ensures that your family receives the value you have built up in the business.”

Business Exit & Succession Planning

What is a business succession plan?

It is a documented plan that includes providing for structured transition of ownership to the remaining business partners or family members. It also ensures that your family receives the value you have built up in the business. It provides for the business surviving if you are ill or injured. It can also be used to retain key staff.

What does a business succession plan aim to achieve?

The purpose of having the plan is to take into consideration needless Capital Gains Tax (CGT) and other tax. Provision is made for adequate funding to transfer ownership. Some of the things that can trigger the need for succession are disability, divorce and a medical crisis such as a heart attack or stroke, becoming of unsound mind, or simply retirement.

Why should I consider business succession planning?

There are a variety of reasons, but if you were to suffer from an accident, heart attack or some other life altering event, have you planned for the following:

  • Selling your interests to your business partners, a third party or employees?
  • Keeping your business for your family?

Who arranges all the documentation and manages the process?

Our specialists offer an all-inclusive service to manage the entire process. Although we are not lawyers or tax advisers, we understand the tax and legal implications of having your business succession affairs in good order. As trusted advisers, we take care of the process of arranging the following:

  1. Valuing the business with your accountant.
  2. Arranging formal documentation with knowledgeable lawyers.
  3. Setting in place funding arrangements to cover the three main events:
  • If you pass away
  • If you suffer total and permanent disability
  • If you are diagnosed with a critical illness or medical trauma 

 

How should the succession plan be funded?

There are generally six accepted methods of funding the succession:

  • Borrow funds from the bank
  • Start a sinking fund
  • Write out a cheque
  • Agree on vendor terms
  • Insurance
  • A combination of the above

What is generally done?

No two businesses are identical, but as a general guideline it is often most economical to use insurance as the funding vehicle.

Who advises on how the insurances should be owned?

One of our exit planning specialists will discuss this in depth with you and provide tailored advice matched to your unique business and its needs. 

We work with your accountant and lawyer to ensure that your affairs are correctly set up.

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Fun Fact

The combined revenue for the Top 500 private companies in Australia was $359.9 billion, an increase of 7.9% when compared to 2023’s total of $333.6 billion.